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

Friday’s bond market has opened in negative territory after this morning’s employment data showed quite confusing results. The stock markets initially reacted favorably to the news pre market, but have since changed direction. The Dow and Nasdaq are nearly unchanged with both indexes up only a couple of points. The bond market is currently down 10/32, which will likely push this morning’s mortgage rates higher by approximately .250 - .375 of a discount point if comparing to yesterday’s morning rates. Weakness late yesterday is contributing to that increase.

Today’s major data was January’s Employment report that was released early this morning. It did anything but give us a clear indication of whether the labor market has improved or worsened. The headline numbers made little sense to the markets and have led to plenty of speculation about why one reading showed strength in jobs while other theories indicated weakness. Depending on who you believe, this report is very good news for bonds or extremely bad. Unfortunately, the correct answer is probably in between somewhere.

The Labor Department announced that the U.S. Unemployment rate fell from 9.4% in December to 9.0% last month. This was a huge surprise because analysts were expecting to see it increase to 9.5%, which supports the side that says this report shows strength in the labor market and makes it bad news for bonds and mortgage rates. However, the data also showed that only 36,000 new jobs were added to the economy last month, falling well below forecasts of 148,000. That headline number points toward labor weakness, meaning it was good news for the bond market.

So, which side should we hook our wagon to? That is an extremely good question with no good answer. The weather could have heavily skewed the numbers, but it could have been either way. Watching the pundits on TV this morning certainly did not help sway my vote either. There seems to be a lack of a consensus amongst them and market traders, leaving all of us scratching our heads.

A bit of data in the report that could have been the deciding factor for bonds to move lower this morning was the average hourly earnings data. It showed an increase in earnings of 0.4% that was twice what analysts had expected. Rapidly rising wages leads to concerns about wage inflation that can easily spread to other parts of the economy and means consumers have more money to spend. Therefore, this reading is negative for bonds and mortgage rates.

Next week is light in terms of economic releases, but we do have two relevant Treasury auctions and an appearance by Fed Chairman Bernanke that will likely influence the markets. There is nothing of relevance until the middle part of the week, but look for details on next week’s events in Sunday’s weekly preview.

If I were considering financing /refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float 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.