Today's Commentary

Updated on March 4, 2015 11:17:04 AM EST
Wednesday’s bond market has opened down slightly despite sizable losses in stocks. The stock markets are in selling mode this morning with the Dow down 157 points and the Nasdaq down 36 points. The bond market is currently up 2/32 (2.11%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point.

This morning’s relevant economic data was the monthly ADP Employment report at 8:15 AM ET. It revealed an increase of 212,000 private-sector payrolls that fell short of the 220,000 that was expected. This wasn’t a huge variance from forecasts, but the weaker number is considered good news for bonds and mortgage rates. Unfortunately, an upward revision of 37,000 to January’s number offset any positive reaction in bonds that we could have expected. The bottom line is that this data had little impact on this morning’s mortgage rates.

We have something to look for later this afternoon also. The Fed Beige Book will be posted at 2:00 PM ET today. This report, which is named simply after the color of its cover, details economic activity throughout the country by Federal Reserve region. The Fed relies heavily on this data during their FOMC meetings, so look for a potential reaction during afternoon trading following its release. It probably will not cause a major sell off in the stock or bond markets, but it is still worth watching.

Tomorrow has three reports scheduled for release, but none of them are considered to be highly important. The first is the revised Productivity index for the 4th Quarter of last year. The preliminary reading posted last month showed a decline of 1.8% in worker output. Analysts are expecting to see a downward revision of 0.5% to last month's initial reading. Employee productivity is watched fairly closely because a higher level of output per hour is believed to mean that the economy can expand without inflation concerns. However, since this data is quite aged now, it likely will have little impact on tomorrow's mortgage rates unless it shows a significant change.

Last week’s unemployment figures will also be posted at 8:30 AM ET tomorrow. They are expected to show that 295,000 new claims for unemployment benefits were filed last week. This would be a decline from the previous week’s 313,000 initial filings. The larger the number of new claims, the better the news it is for bonds and mortgage rates.

The final report of the day is January's Factory Orders at 10:00 AM ET, which will give us a measurement of manufacturing sector strength. This data is similar to last week's Durable Goods, except this report covers orders for both durable and non-durable goods. Current forecasts are calling for an increase in new orders of approximately 0.6%. A smaller than expected increase would be good news for the bond market and could lead to an improvement in mortgage rates since it would point towards economic weakness.

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.

 ©Mortgage Commentary 2015
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