Thursday, February 5, 2015 - Article by: Bart Castelli - Homestar Financial Corporation NMLS #70864 -
Mortgage rates held steady even though the morning started off a bit rough. Good news for the job markets and economic outlook - but today's report is not data that is included in the January employment data out tomorrow. The Q4 productivity decline and the increase in Q4 unit labor costs is not the end all, however with the Fed on the lookout for any increase in inflation the data is a slight bright spot for possible increase in wages that so far have not materialized. Only anecdotal so far, but a glimmer.
The employment report tomorrow will have plenty to confuse, including myself. Based on previous January employment reports the forecasts have usually fallen short of reality. If that holds we may see the non-farm jobs under 200K (estimates 230K). The unemployment rate will likely be unchanged at 5.6%.
The main thing now to focus on is the trading in the 10 yr note. 80% of all trading in the last 15 trading sessions has been between 1.84% and 1.70%. Data and economic events here and globally are not to be ignored but the wide swings in nearby sentiment are being roiled with continual different perspectives. The best way now to think about it; if the 10 regardless of why, closes above 1.84% it will do serious damage to the lower rate outlooks. Don't argue with the way traders and investors act, watch the movement and go with it. As long as the 10 is under 1.84% the technical outlook remains bullish.
In summary, tomorrow brings the big Employment Situation Report. Historically, this is the single most important piece of economic data of any given month. While that continues to hold true, other non-data related events have conspired to rob it of much of its past significance. Even so, it is still quite capable of motivating big short-term changes in rates, and in either direction depending on the tenor of the data. During the past several months I have always suggested to lock before the report, as I have been stating for the past several days. The risks are just too much than the rewards can be from not doing such.
Remember, if you want to know the benefits of locking your rate today versus floating, simply give me a call at 314-744-7806 or visit my website at www.CallTheMoneyMan.com. I have access to real time Wall Street data and instant market alerts with breaking news that I monitor throughout the day to assist us on making the informed decision.
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