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 If you are considering locking in an interest rate for a New York mortgage or a Florida mortgage, read this post.

The Labor Department reported early this morning that 398,000 new claims for unemployment benefits were filed last week. Not only was this a sizable decline from the previous week’s revised total of 422,000 new claims, but it also breaks an important threshold of 400,000. This is certainly negative news for the bond market and mortgage rates because it points toward strength in the labor market. Fortunately though, traders appear not to be too concerned with the news. This may be partly because the data tracks only a single week’s worth of new claims. However, this much of a change and a sub-400,000 total on a day with no other data usually would have prevented a positive opening in bonds. This helps underscore the confusion in the markets while the debt ceiling issue plays out.

There is no other relevant economic data scheduled for release today, but we do have the 7-year Treasury Note auction to watch. Yesterday’s 5-year Note sale did not go very well, as expected. That gives us little to look forward to in today’s auction. I believe weak interest in today’s auction is pretty much expected, so unless something surprising takes place the results of the sale likely will not heavily influence mortgage rates. Results of the auction will be posted at 1:00 PM ET, so if the bond market does react, it will come during early afternoon hours.

Speaking of yesterday afternoon, the Fed Beige Book didn’t show anything major that we didn’t already know. The report indicated that economic activity slowed in seven of the twelve Fed bank regions in June and early July. That is good news for the bond market because weaker economic conditions traditionally make long-term securities such as mortgage-related bonds more appealing to investors. However, it wasn’t new news to most people. Accordingly, bonds failed to rally from the release.

Tomorrow brings us the release of three economic reports that may have an impact on mortgage rates, including arguably the single most important report we regularly see. That would be the preliminary reading of the 2nd Quarter Gross Domestic Product (GDP), which is considered to be the best indicator of economic activity. It is the sum of all goods and services produced in the U.S. and usually has a great deal of influence on the financial markets. Current forecasts are estimating that the economy grew at a 1.7% annual rate during the second quarter. A faster pace will probably boost stock prices and hurt bond prices, leading to higher mortgage rates tomorrow. But a smaller than expected reading could fuel a bond market rally and lead to lower mortgage pricing.

The second report of the day is the 2nd Quarter Employment Cost Index (ECI) that measures employers' costs for wages and benefits. It is considered to be an important measurement of wage inflation and can impact the bond market and mortgage rates if it varies much from forecasts. If it shows a rapid increase, raising inflation concerns, the bond market may drop and mortgage rates rise. It is expected to reveal an increase of 0.5%, but the GDP reading likely will have more of an influence on the markets and mortgage rates.

Tomorrow’s third piece of data is the final revision to July's University of Michigan Index of Consumer Sentiment that will help us measure consumer optimism about their own financial situations. This data is considered relevant because rising consumer confidence usually translates into higher levels of spending. This adds fuel to the economic recovery and is looked at as bad news for bonds. Tomorrow's release is an update to the preliminary reading we saw two weeks ago, so unless we see a drastic revision to the preliminary estimate, I think the markets will probably shrug this news off. It is expected to show no change from the preliminary reading of 63.8.

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.

Empire Home Mortgage Inc. is a registered Mortgage Broker with the New York and Florida State Banking Departments and our loans are arranged through third party providers.

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