Rate Lock Advisory

Wednesday, July 2nd

Wednesday’s bond market has opened in negative territory despite quite favorable economic news. Stocks are mixed again with the Dow down 110 points and the Nasdaq up 77 points. The bond market is currently down 13/32 (4.28%), which should push this morning’s mortgage rates higher by approximately .125 - .250 of a discount point.

13/32

Bonds

30 yr - 4.28%

110

Dow

44,384

77

NASDAQ

20,280

Mortgage Rate Trend

Trailing 90 Days - National Average

  • 30 Year Fixed
  • 15 Year Fixed
  • 5/1 ARM

Indexes Affecting Rate Lock

Medium

Positive

ADP Employment

June's ADP Employment report was released at 8:15 AM ET this morning, showing a surprising loss of 33,000 private-sector jobs last month. This was a huge miss from the 100,000 jobs added that was predicted and indicates weakness in the employment sector. Accordingly, we can label the report good news for bonds and mortgage rates.

Medium

Negative

General Bond Trends

It is not this morning’s economic data that is causing the early bond selling. The ADP report failed to reverse overnight weakness in bonds, allowing losses to carry into this morning’s session. We could be seeing a little of that reaction to the U.S. spending bill that we addressed yesterday. As the budget deficit calculations grow in the bill, reality is starting to set in the bond market because the government will need to sell more debt than it currently does to fund operations. This additional supply outweighs expected demand, hurting current bond prices. If this pattern continues, we can expect to see mortgage rates move higher in the coming weeks and months. This is the primary reason for our current lock recommendations.

High

Unknown

Employment Situation

Tomorrow brings us four economic reports, one being the almighty monthly governmental Employment report. June’s Employment report will be released at 8:30 AM ET, giving us the U.S. unemployment rate, number of new payrolls added or lost and some earnings figures. These are considered to be extremely important employment sector readings that can have a huge impact on the financial markets. Analysts are expecting to see the unemployment rate held at May’s 4.2% and approximately 120,000 jobs added to the economy last month, while earnings rose 0.3%. A higher unemployment rate, fewer new jobs and a smaller increase in earnings would be considered favorable news for rates.

Medium

Unknown

Weekly Unemployment Claims (every Thursday)

Last week’s unemployment update will also be posted early tomorrow morning. Forecasts have it showing 240,000 new claims for jobless benefits were made during the week. This would be an increase from the previous week’s 236,000 initial filings, indicating the employment sector weakened. The larger the number of new claims, the better the news it is for rates.

Medium

Unknown

Factory Orders

May's Factory Orders report will give us another indication of manufacturing strength at 10:00 AM ET tomorrow. It is similar to the Durable Goods Orders report that was released last week but covers both durable and non-durable goods. It usually doesn't have as much of an impact on the bond market as the durable goods data does, meaning there is no reason to believe this report will heavily influence the markets or mortgage pricing. Current expectations show an 8.0% rise in new orders from April. A much smaller increase would be good news even though it likely will have little impact on tomorrow’s mortgage pricing.

Medium

Unknown

ISM Service Index

Closing out this week’s calendar will be the release of the Institute for Supply Management's (ISM) non-manufacturing index (aka service index) for June at 10:00 AM ET. This is the sister report of yesterday's ISM manufacturing index with this version tracking business executive opinions on conditions in the service sector rather than manufacturing. It is expected to show a reading of 52.2, up from May's 49.9. A reading above 50.0 means more surveyed executives felt business improved during the month than those who said it worsened. Good news for mortgage rates would be a much weaker than predicted reading.

Low

Unknown

Holiday Schedule

The bond market will close at 2:00 PM ET today ahead of tomorrow’s Independence Day holiday and will reopen for regular trading Monday. Stocks will close at 1:00 PM and also be closed tomorrow. These holiday hours sometimes create pressure in the bond market as traders look to protect themselves while the U.S. markets are closed for the extended weekend. This may lead to another small increase in mortgage pricing later today.

---

Unknown

none

Since the markets are closed tomorrow and no relevant economic reports are being released, there will not be an update to this report until Sunday evening’s weekly preview. We would like to take this opportunity to wish you a safe and wonderful holiday weekend!

Float / Lock Recommendation

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... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

Ruidoso Mortgage

Equal Housing Lender
NM Office:
o: 575-258-1316 | f: 575-258-1320
e: info@ruidosomortgage.com
1123 Mechem Dr Ste 1
Ruidoso, NM 88345
NMLS: 188344
Texas Office:
o: 888-RUIDOSO | By Appt. Only
e: info@ruidosomortgage.com
2509-74th Street
Lubbock, TX 79423
NMLS: 188344 BR: 928461



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