Rate Lock Advisory

Wednesday, April 30th

Wednesday’s bond market has opened down slightly following mixed economic data. Stocks are showing early weakness with the Dow down 434 points and the Nasdaq down 311 points. The bond market is currently down 1/32 (4.18%), which should keep this morning’s mortgage rates close to Tuesday’s early pricing. If you saw an intraday improvement in rates yesterday afternoon, you may see an increase this morning of the same size.

1/32

Bonds

30 yr - 4.18%

434

Dow

40,093

311

NASDAQ

17,149

Mortgage Rate Trend

Trailing 90 Days - National Average

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

Indexes Affecting Rate Lock

Medium

Positive

ADP Employment

There was an abundance of economic data posted this morning. It started with April’s private-sector Employment report at 8:15 AM that showed only 62,000 new jobs were added to the economy. This was much smaller than the 128,000 that was predicted, hinting the labor market in the private sector was not as strong as thought. Since it is a sign of slower economic activity, the data is favorable for bonds and mortgage rates.

High

Neutral

Gross Domestic Product (GDP)

One of this morning’s two key reports was the initial Gross Domestic Product (GDP) reading for the 1st quarter at 8:30 AM ET. It revealed the U.S. economy contracted at a 0.3% annual rate during the January through March months when analysts had forecast a 0.4% expansion rate. The headline GDP number appears to be very good news for bonds and mortgage rates, especially considering this was the first negative reading since early 2022. However, secondary readings within the report that are related to inflation came in much stronger than expected. Bond traders look to be stuck between using a weaker economy to drive trading this morning, which is favorable for mortgage rates, or concerns about rising costs (inflation) that make long-term securities less valuable to investors.

Medium

Neutral

Employment Cost Index (Quarterly)

The third report of the morning was 1st Quarter Employment Cost Index (ECI) that tracks employer costs for wages and benefits. It matched expectations of a 0.9% increase, indicating employer costs did rise moderately but they weren’t any worse than thought. We are labeling the report neutral for mortgage rates because it showed no surprises and some of the morning’s other releases carry a much higher level of significance in the markets.

High

Negative

Inflation News

Today’s second major release was March’s Personal Income and Outlays report that includes the Fed’s preferred inflation readings. The Personal Consumption Expenditures (PCE) indexes in the report didn’t show any major surprises for the month. March’s overall PCE was unchanged from February, as it was expected to be. The core reading was predicted to rise 0.1% but also came in unchanged. While that was good news, upward revisions to all of the February PCE readings offset that slightly good news. Unfortunately, the annual readings were not helpful either. The overall PCE rose at a 2.3% annual pace when forecasts had it at 2.2%. The core PCE matched expectations of a 2.6% pace.

Medium

Negative

Personal Income and Outlays

The other data in the report was also bad news for bonds. March’s personal income rose 0.5% while spending jumped 0.7%, likely a signs consumers bought before tariffs went into effect. Analysts were expecting to see increases of 0.4% and 0.5% respectively. In short, there are no major variances in the report, but several minor points that are unfavorable for rates.

Medium

Unknown

Weekly Unemployment Claims (every Thursday)

Tomorrow has two more relevant economic reports. Neither are quite as important as some of this morning’s data, but one is considered to be pretty influential on the markets. First will be last week’s unemployment update at 8:30 AM. It will tell us the number of new unemployment claims that were filed last week. They are expected to be at 225,000, up from the previous week’s 222,000 initial filings. Rising claims are a sign of weakness in the employment sector, meaning a larger number would be considered favorable for bonds and mortgage rates.

High

Unknown

ISM Index (Institute for Supply Management)

The more important release is April’s Institute for Supply Management (ISM) manufacturing index at 10:00 AM ET tomorrow. This highly important report gives us insight into manufacturer sentiment on business conditions. A reading below 50 means that more surveyed trade executives felt business worsened during the month than those who felt it had improved. Analysts are expecting to see a reading of 47.9, down from March's 49.0. Bond traders would prefer to see a larger decline from March's level, which would signal the manufacturing sector weakened more than thought during the month.

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... 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.

Googain Inc;1288 Kifer Road Suite 208, Sunnyvale, CA 94086; NMLS:275975; www.NMLSConsumerAccess.org. Equal Housing Lender.
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