Mortgage Interest Update and Job numbers

Jobless claims decreased by 32,000 to 300,000 in the week ended April 5, the lowest since May 2007, a Labor Department report showed today in Washington. The figure was lower than the most optimistic forecast in a Bloomberg survey of 52 economists. The median estimate called for 320,000 claims. The number of people continuing to receive jobless benefits decreased by 62,000 to 2.78 million in the week ended March 29, the lowest since January 2008. Before the better claims report the 10 yr note rate was down 4 bps from yesterday’s close at 2.66%, by 9:00 the 10 was back to 2.68% still 2 bps lower than yesterday.

The FOMC minutes yesterday afternoon eased market fears of increasing interest rates that had built when Janet Yellen made a poor comment at her first press conference after the meeting, saying the Fed would likely begin increasing rates shortly after the tapering is finished (likely in Oct). Several Fed policy makers said a rise in their median projection for the main interest rate exaggerated the likely speed of tightening, according to the minutes. Some expressed concern the rate forecasts “could be misconstrued as indicating a move by the committee to a less accommodative reaction function,” according to the statement. The market reactions sent the stock indexes higher and US interest rates recovered from their lower prices to end the day abut unchanged. This morning the Chinese news drove the 10 lower, to 2.66% then weekly claims countered the rally; had MBSs been trading their price gains would have been +20 bps from yesterday’s close.

There is still no immediate reason to lock your interest rate as we may see some more improvements. I am suggesting to float your interest rate and look to lock in next week.