Florida Mortgage Rates – Morning Update

by Florida's #1 Mortgage Planner on June 6, 2008

Locking Stance:  SKEPTICALLY FLOATING  Mortgage Bonds:  +9bp

That is probably a position you have never heard of, but what the heck.  I cannot deny the fact that mortgage bonds are rising after the release of this morning’s news, so a floating stance, even momentarily, is warranted.  But, be warned, things can (and have) changed quickly.

If you take a look at this morning’s data, you are likely very confused.  Why?  Take a look at the data that was released and see for yourself…

  • Non-farm Payrolls:  Beat expectations (-49K versus -60K)
  • Hourly Earnings:     Higher than expected (0.3% vs. 0.2%)
  • Average Work Week:  Right on (33.7 vs. 33.7)
  • Unemployment Rate:  Higher than expected (5.5% vs 5.1%)

What?  Payrolls beat expectations and unemployment skyrockets?  Well, mixed news sometimes is a blessing, not to mention technically we needed a correction and we’re getting it.

All eyes went from the non-farm payroll numbers to the unemployment rate since the headlines are “Biggest rise in unemployment in 33 years”.  Bonds are rallying on that information, but can it be that good (skeptical me)?

Due to the way unemployment is calculated, the number jump is not as alarming as people may think and may not be realistic.  The other data is negative for bonds, so I think the markets will turn lower again after the full data gets digested.  For now, bonds are rallying off their lows, so floating is in order. (for a split second?)

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