Friday’s bond market has opened very strong after this morning’s employment data showed weaker numbers than was expected. The stock markets have fluctuated between positive and negative territory but are currently showing losses of 42 points in the Dow while the Nasdaq has lost 11 points. The bond market is currently up 25/32, pushing the yield on the benchmark 10-year Note down to 5.00%. This should improve this morning’s mortgage rates approximately .375 of a discount point.

The Labor Department reported that the U.S. unemployment rate slipped 0.1% to 4.6% last month. However, the markets have ignored that reading, choosing to use the weaker than expected number of payrolls to sell stocks and buy bonds. The report revealed that 75,000 new jobs were added to the economy when forecasts had called for 170,000 jobs. This was great news for bonds and mortgage rates.

Another portion of the report added incentive to buy bonds. The Average Hourly Earnings reading rose only 0.1%. It was expected to rise 0.3%, meaning that wages didn’t rise as much as expected. This is wonderful news because wage inflation is a concern to the Fed. This reading has some traders thinking that the Fed may not need to raise rates at the next FOMC meeting. We’ll see if that turns out to be accurate when the Fed meets June 29th.

Th e Commerce Department posted April’s Factory Orders data late this morning, but after the Employment results, we could hardly notice. They said that orders for durable and non-durable goods fell 1.8% in April. Analysts were expecting to see a 2.1% drop, but it has had no impact on bond trading or mortgage rates this morning.

This morning’s news was wonderful for bonds and mortgage rates. Despite today’s rally though, I am not only holding the lock recommendation for immediate and short-term periods, but also extending to longer-term periods. Today’s rally led to a nice drop in mortgage pricing and there is a possibility of more to come. However, until the markets are able to stay below some important thresholds, we run the risk of profit taking causing mortgage rates to rise in the immediate future.

This doesn’t necessarily mean that I feel rates will move higher during this time frame. It simply means that in my opinion there is not a strong likelihoo d that we will see rates improve enough to offset the risk of continuing to float. In other words, the risk versus reward scale is leaning towards the risky side. The longer-term outlook is still positive, at least for the time being.

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.

a la mode