Good morning on this best day of the week Wednesday from your Hometown Lender. Here is today’s market analysis!
It is July 1. The year is half over; we are now in the 3rd quarter (which sounds a bit worse).
Yesterday, things were humming along just fine until noon, when the bottom fell out, and bonds started to sell off like crazy. By the end of the day, mortgage bonds were down about 40 bps. There was no direct cause, so I guess we blame it on quarter and month-end trades. We have had a bit of a choppy start for bonds this morning, but are finally seeing some green on the screen. Still, after yesterday’s losses, rates today will be worse than yesterday.
Reprice risk on the day is low, but there is risk floating into tomorrow’s BLS jobs data. While there are plenty of reasons to argue tomorrow’s data won’t be a big market mover, there is still too much risk to float anything closing in July into tomorrow. It is better to lock and float down than to gamble.
Market Analysis – From a higher and better view:
- Bonds: The 10-year Treasury is hovering around the mid-4.4% range, with yields moving around as markets digest softer ADP jobs data, Fed commentary, oil prices, and tomorrow’s official jobs report. Bonds are calmer, but still checking their email every 12 seconds.
- Mortgage Rates: Daily tracking shows the 30-year fixed around 6.47% and the 15-year fixed around 5.88%. Freddie Mac’s latest weekly survey showed the 30-year fixed at 6.49% and the 15-year fixed at 5.84%.
- Jobs: ADP reported private payrolls rose 98,000 in June, below expectations of 118,000 and down from May’s 122,000. Layoffs declined, so the labor market is cooling — not cracking.
- Fed Watch: Markets are watching Chair Kevin Warsh’s comments closely. Softer jobs data helps the bond market, but inflation remains above target and traders are still debating whether the Fed stays on hold or hikes later this year.
- Oil / Geopolitics: Brent crude is near the low $70s, close to pre-war levels, as Iran-U.S. diplomacy continues. Lower oil helps the inflation story, but Middle East risk is not exactly taking a long weekend.
- Markets: Global stocks paused after a strong second-quarter rally, with investors focused on jobs data, Fed policy, and whether the AI-led market run can keep carrying the load.
Market Analysis – What It Means
Today’s tone is slightly better for rates. Softer ADP jobs data and lower oil help the bond market, but tomorrow’s official jobs report is the bigger test.
In plain English: the market is getting some relief, but it is not ready to declare victory. Buyers still need a payment strategy.
Market Analysis – Housing & Mortgage Strategy
This remains a structure-the-payment market.
The best conversations right now are about:
Seller credits, temporary buydowns, permanent buydowns, builder incentives, ARM options where appropriate, and a realistic refinance plan if rates improve later.
Buyers are still active, but they are doing math. Sellers and builders who help solve the monthly payment problem have the best chance of turning interest into contracts.
Lock vs. Float
- Lock bias: If closing within 30 days, the borrower is payment-sensitive, or the file is tight, locking remains the cleaner recommendation.
- Float bias: Floating may make sense only with time, flexibility, and a clear trigger. Tomorrow’s jobs report can move bonds quickly.
Market Analysis – Today’s guidance:
Bias toward locking short-term closings. For longer timelines, cautious floating may be reasonable only with a clear risk ceiling and daily monitoring.
Stay safe and make today great!