Wednesday, January 8th
Wednesday’s bond market has opened flat following mixed economic news. Stocks are showing early losses of 102 points in the Dow and 49 points in the Nasdaq. The bond market is unchanged from yesterday’s close (4.68%), which should keep this morning’s mortgage rates close to Tuesday’s early pricing.
0/32
Bonds
30 yr - 4.68%
102
Dow
42,426
49
NASDAQ
19,440
Trailing 90 Days - National Average
Medium
Neutral
Yesterday’s 10-year Treasury Note auction was uneventful for mortgage rates. The results indicated investor demand was average compared to other recent sales. Bonds had weakened long before the 1:00 PM ET results announcement, but started to rebound approximately 30 minutes before they were posted. Once they were announced, there was little reaction. In other words, it does not appear the auction had an impact on rates. The biggest moves in bonds came before we knew the details of the auction.
Medium
Positive
The first of this morning’s economic releases was December’s ADP Employment report at 8:15 AM ET. It revealed 122,000 new private-sector jobs were added last month. Forecasts were predicting a number in the neighborhood of 135,000, meaning we can label the report favorable. That said, it wasn’t enough of a variance to cause a strong reaction in the bond market.
Medium
Negative
That employment data was followed by the 8:30 AM ET weekly unemployment update. It was posted this morning instead of the usual Thursday morning because federal offices are closed tomorrow for the National Day of Mourning for former President Carter. It showed only 201,000 new claims for jobless benefits were filed last week, down from the previous week’s 211,000 and the lowest number since early last year. Analysts were expecting to see an increase to 215,000 initial filings. The decline is a sign of strength in the employment sector, making the data bad news for bonds and mortgage pricing.
Medium
Unknown
We also have two afternoon events that we will be watching. First will be the results of today’s 30-year Treasury Bond auction at 1:00 PM ET. Hopefully, investor demand will be stronger for these securities than they were for yesterday’s sale. That is likely being a bit overly optimistic considering the recent negative momentum in bonds and the large amount of Treasury and corporate debt that is expected to be sold this year. If investors are more interested in today’s auction, we could see afternoon strength in bonds and a possible minor improvement in rates.
Medium
Unknown
Furthermore, the minutes from last month's FOMC meeting will be posted at 2:00 PM ET. They will show discussion and concerns regarding inflation, employment strength and future plans for monetary policy moves. It is one of those pieces of information that may cause a great deal of volatility in the markets or be a non-factor, depending on what is in them. The last FOMC meeting was followed by revised Fed predictions and a press conference by Fed Chairman Powell, so the possibility of seeing something unexpected is somewhat minimal.
Low
Neutral
There is no relevant data or other events scheduled for tomorrow. What was initially set has been moved to today. Stocks are set to be closed tomorrow. However, bonds will trade until an early close of 2:00 PM ET. Most banks should be open, but the U.S. Post Office will not deliver regular mail.
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... Float 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.