Sample Commentary Report




Wednesday’s bond market has opened in positive territory, extending yesterday’s afternoon strength. Stocks are showing moderate gains of 63 points in the Dow and 19 points in the Nasdaq. The bond market is currently up 3/32 (1.59%), which with yesterday’s late gains should improve this morning’s mortgage rates by approximately .125 – .250 of a discount point.

There is no relevant economic data being released today. May’s ADP Employment report was moved to tomorrow due to the Memorial Day holiday.

Later today, the Fed will post their Beige Book report that details economic conditions throughout the U.S. by Federal Reserve region. This report is relied upon heavily by the Fed when determining monetary policy during their FOMC meetings. Today’s update is expected to show economic gains since the last version. It will be posted at 2:00 PM ET, meaning if it is going to affect rates, it will happen during mid-afternoon hours.

Tomorrow morning has three pieces of economic data for the markets to digest, starting with the ADP Employment report at 8:15 AM ET. This report tracks changes in private-sector jobs, using ADP’s payroll processing clients as a base. While it does draw attention, it is my opinion that it is overrated and is not a true reflection of the broader employment picture. It also is not accurate in predicting results of the monthly government report that follows a couple days later. Still, because we sometimes see a reaction to the report, we will be watching it. Traders are expecting it to show that 650,000 private sector jobs were recovered during the month. The smaller the increase in jobs, the better the news it is for mortgage rates.

1st quarter Productivity and Costs data will be released at 8:30 AM ET. Productivity data measures employee output and employer costs for wages and benefits. It is considered to be moderately important because it helps us measure wage inflation. Many analysts believe that the economy can grow with low inflationary pressures when productivity is high. Last month’s preliminary reading revealed a 5.4% rise in productivity and a 0.3% decrease in labor costs. Tomorrow’s update is predicted to show irrelevant revisions. I don’t think this piece of data will have much of an impact on the bond market or mortgage pricing unless it varies greatly from expectations.

The final report of the day will be last week’s unemployment update, also at 8:30 AM ET. Analysts are expecting to see 400,000 new claims for benefits were filed last week, down slightly from the previous week’s 406,000 initial filings. Rising claims is a sign of a weakening employment sector. Therefore, the higher the number of claims the better the news it is for mortgage rates.

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…







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