Indexes Affecting Rate Lock

High

Neutral

Employment Situation

This morning’s major economic news came from April’s Employment report that was posted at 8:30 AM ET. It revealed 115,000 new jobs were added to the economy last month, greatly exceeding forecasts for a second straight month. April’s payroll number was more than twice the 62,000 that was expected, indicating strength in the employment sector. The unemployment rate held March’s 4.3% to match expectations. The average hourly earnings reading of up 0.2% fell short of the 0.3% that was predicted. It is worth noting that the 0.2% increase is a round up and that it was actually just above 0.15%.

High

Unknown

Misc Fed

In short, the payroll number is bad news for bonds and mortgage rates because it signals employment strength that makes it harder for the Fed to justify a cut to key short-term interest rates in the near future. The Fed’s two objectives are to keep inflation down and employment up. With the sector showing solid growth the past two months, the Fed may need to turn their attention just to inflation, which would require a rate hike rather than a cut. That said, the softer earnings data was favorable since it eases wage inflation concerns that can spread to other parts of the economy.

Medium

Positive

Univ of Mich Consumer Sentiment (Prelim)

Today’s second release was more clearly favorable news for bonds. The University of Michigan announced late this morning that the preliminary reading to their May Index of Consumer Sentiment stood at 48.2. This was a decline from April’s 49.8 and lower than forecasts. The lower reading means more surveyed consumers felt better about their finances last month than they do this month. Waning confidence usually translates into softer consumer spending numbers that fuel economic growth. Softer consumer spending numbers make bonds more appealing to investors. Accordingly, today’s release was good news for rates.

Medium

Unknown

Existing Home Sales from National Assoc of Realtors

Next week is another busy one with economic data scheduled to be released each day. April’s Existing Home Sales report will start the week’s activities late Monday morning. Of particular interest will be two key inflation readings and a highly influential report on consumer spending. In addition to the data, there are also two long-term Treasury auctions taking place that may affect rates during afternoon trading midweek. And of course, Iran-related headlines will likely have an impact on the markets multiple days. Look for details on all of next week’s scheduled events in Sunday evening’s weekly preview.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

Employment Situation

Misc Fed

Univ of Mich Consumer Sentiment (Prelim)

Existing Home Sales from National Assoc of Realtors

Float / Lock Recommendation