Rate Lock Advisory

Wednesday, April 1st

Wednesday’s bond market has opened in positive territory again as optimism grows that the Iran war will be ending soon. Stocks are adding on to yesterday’s huge rally that pushed the Dow higher 1,125 points and the Nasdaq up almost 800 points. Today’s gains are more subdued with the Dow up 316 points and the Nasdaq up 219 points. The bond market is currently up 4/32 (4.32%) despite unfavorable economic news. However, a little weakness late in the day yesterday should keep this morning’s mortgage rates close to Tuesday’s morning pricing.

4/32

Bonds

30 yr - 4.32%

319

Dow

46,658

219

NASDAQ

21,809

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Negative

ADP Employment

The first of this morning’s three economic reports was ADP’s March Employment report at 8:15 AM ET. It showed 62,000 new non-governmental payrolls were added to the economy last month. Forecasts had the number around 40,000, signaling this part of the employment sector may have been stronger than many had thought. While the headline number is bad news for bonds and mortgage rates, it should be noted that this data rarely is a correct indication of what the much more detailed governmental Employment report shows days later. We are labeling today’s report unfavorable for rates with a footnote to wait until Friday’s version is released before judging the employment sector.

High

Negative

Retail Sales

February’s Retail Sales report was posted at 8:30 AM ET, revealing consumers spent more than expected. Retail level sales rose 0.6% last month, exceeding expectations of 0.4%. A secondary reading that excludes more costly and volatile auto sales also rose more than expected. These numbers indicate consumers are still fueling economic growth. They also support the theory that the Fed does not need to cut key short-term interest rates to keep the economy growing. It will be interesting to see how much higher gas prices and other costs related to the Iran war will have affected March spending. In the meantime, this data is bad news for the bond market and contributed to bonds erasing overnight gains.

High

Negative

ISM Index (Institute for Supply Management)

March’s manufacturing index from the Institute for Supply Management (ISM) came at 10:00 AM ET. It was announced at 52.7, up slightly from February’s 52.4. The increase means surveyed manufacturing executives felt better about business conditions last month than they did in February. As a sign of economic strength, we have to consider the report to be unfavorable for rates also, especially since forecasts showed a slight decline instead of increase.

Medium

Unknown

Weekly Unemployment Claims (every Thursday)

Tomorrow’s only relevant data will be last week’s unemployment update at 8:30 AM ET. It is expected to reveal 213,000 new claims for jobless benefits were filed during the week. This would be an increase from the previous week’s 210,000 to hint the employment sector softened a bit. Good news for mortgage rates would be a sizable increase in new claims, but since this is just a weekly snapshot and we will get the much more detailed monthly Employment report Friday morning, we shouldn’t see too much of a reaction to tomorrow’s release unless it shows a significant variance from forecasts.

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... 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.

Thomas-Chambers Company
BRE # 01208644

449 W MacArthur Blvd.
Oakland, CA 94609
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