Rate Lock Advisory

Wednesday, October 1st

Wednesday’s bond market has opened in positive territory following much weaker than expected economic news. Stocks are in negative ground with the Dow down 29 points and the Nasdaq down 66 points. The bond market is currently up 11/32 (4.10%), but weakness late yesterday is going to keep this morning’s mortgage rates close to yesterday’s early pricing. If you saw an intraday increase in pricing yesterday afternoon, you should see an improvement of about the same amount this morning.

11/32


Bonds


30 yr - 4.10%

29


Dow


46,368

66


NASDAQ


22,593

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

This morning’s first economic release was September's ADP Employment report at 8:15 AM ET. It showed private employment was much softer over the past two months than previously thought. September’s number was a huge miss from forecasts, declining 32,000 when the report was expected to indicate 40,000 new payrolls were added. The net loss of jobs wasn’t limited to September either. August’s number that was previously announced at up 54,000 jobs, is now revised to down 3,000. These new figures signal job losses over the previous two months instead of job growth, at least in the private sector. We can argue that the ADP is not reliable in predicting results of the much more influential governmental Employment report, but it looks as if this is the only employment data we will get this week due to the government shutdown. Therefore, we are labeling the data very good news for bonds and mortgage rates.

High


Neutral


ISM Index (Institute for Supply Management)

The Institute for Supply Management (ISM) gave us their manufacturing index for September late this morning. They announced a reading of 49.1 that was a minor increase from August’s 48.7. This means surveyed manufacturing executives felt business conditions were a little better last month than they were in August. Technically, that is a sign of growth in the sector and economic strength. However, it nearly pegged expectations to prevent a negative response to the news.

Medium


Neutral


Domestic Political Issues

As you likely know by now, the U.S. government shutdown last night at midnight. It appears this is not going to be resolved in the next few days, creating issues in terms of economic releases. Already scratched from the upcoming release schedule are tomorrow’s weekly unemployment figures and August’s Factory Orders report. We also will not be getting Friday’s key Employment report that would have a heavy influence on what the Fed does at this month’s FOMC meeting. We also need to be concerned about the highly relevant Consumer and Producer Price Indexes that help us measure inflation at the consumer and wholesale levels of the economy. Hopefully, there will be an agreement soon that will end the standoff, allowing the data to be released sooner than later.

Medium


Unknown


ISM Service Index

Due to the shutdown, the next piece of data we can expect to see is Friday’s non-manufacturing (aka service index) from the Institute for Supply Management. This will be posted as planned because the ISM is not a governmental agency.

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... Lock 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.


Pacific Coast Financial LLC

Lic# MB 78982

1329 N 47th St # 31045
Seattle, WA 98103