Slight Movement In Mortgage Rates 4-5-2018

By James Brooks

The bond market is down 6/32 (2.83%), which should push Raleigh Area mortgage rates to increase by approximately .125 of a discount point.

Last week?s unemployment figures that were released at 8:30 AM ET this morning showed 242,000 new claims for unemployment benefits were made. This was higher than the 225,000 that was expected and well above the revised 218,000 initial filings of the previous week. Rising claims is a sign of a weakening employment sector. Therefore, we can consider the data good news for bonds and mortgage rates. Unfortunately, we are not seeing much of a reaction because this is just a weekly report.

Today?s move in bonds has pushed the benchmark 10-year Treasury Note yield back above 2.80%. This is bad news for mortgage rates because it took so long to break below that level. It now appears that below 2.80% was short-lived (barring very good news in tomorrow?s big release). If that is the case, then we can expect the 10-year yield to fluctuate between 2.80% and 2.91%. There is a strong argument to make that the range may be narrowed to 2.86% and 2.91%. Since mortgage rates tend to track bond yields, this is not a sign of lower mortgage rates in the immediate future.

Tomorrow brings us the release of a major economic report that can cause a great deal of volatility in the markets if it shows any surprises. March's Employment report will be posted at 8:30 AM ET, revealing the U.S. unemployment rate, the number of jobs added or lost during the month and the change in average earnings. This is an extremely important report to the financial and mortgage markets. It is expected to show that the unemployment rate slipped to 4.0% and that approximately 175,000 payrolls were added to the economy during the month while earnings rose 0.2%. The unemployment rate won?t draw much attention unless it moves noticeably, but a much smaller than expected payroll number and softer earnings growth would be good news for bonds and could push mortgage rates lower tomorrow morning as it would indicate weaker than thought conditions in the employment sector of the economy.

Also on tomorrow?s calendar is a speaking engagement by Fed Chairman Powell that could affect the markets. He will be speaking in Chicago at 1:30 PM. Since the topic is the outlook of the economy, his words may influence the markets and mortgage rates if something unexpected is said.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now.

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