- LESS THAN 2 WEEK CLOSING ................    FLOAT

        - 2-4 WEEK CLOSINGS.                ...............   FLOAT

        - 4+ WEEK CLOSING                  ................    FLOAT

        - CONSERVATIVE CAVEAT         ................    RATES ARE AT THE BOTTOM OF TRADING RANGE.                                                                            CONVENTIONAL WISDOM BASED ON TECHNICAL DATA SUGGESTS LOCK

 Numerous pieces of economic data today!

In the Dow, stocks are up about 175 points at 11:30 AM EST and the 10 year bond is at 3.93%.  Mortgage Backed Securities are all yielding just slightly higher than yesterday.  This has caused mortgage rates from the most competitive lenders to come out with .125% increase to cost.

Usually when the Dow is up that much, Bond prices would be down more than they are and mortgage rates would be more affected than they are.  What is going on.

1. A report showed worker productivity was up more than expected while unit labor costs were down more than expected.  This data is a mixed blessing to mortgage rates.  Normally it's great news, because more productivity and less cost means less inflation (which is an enemy of the bond).  However, today it may have also combined with some other factors to entice traders to buy stocks.  The money that moves into stocks has to move out of bonds and so rates are up a bit.  But that's not the only piece of data affecting the markets today.

2. The ISM surveys "business activity level."  A reading greater than 50 means expansion, less than 50 is contraction.  Today's reading of 54.1 was good, but not as good as the consensus.  More importantly, it was down from the 55.8 reading last month.  This signifies the economy is getting slower.  Good news for bonds here that has likely served to keep rates from going higher than they otherwise would.

3. ADP released a private sector survey of employment which was 3 times better than expected.  Although many analysts view this as an irrelevant report, especially compared to the official reports to be released this coming Friday, they consent that this has been another force creating interest in stocks today, especially combined with the favorable productivity and cost information.

All in all: lots of information today, and lots more coming the rest of the week.  I have float recommendations out because I believe that they reports released tomorrow and Friday will further point toward recession.  If jobless claims are higher than expected, or the employment situation is worse than expected, rates will move even lower.

However, please do note that the mortgage bonds are trading at the bottom of their moving average yields.  This usually means it's a good time to lock, unless the economy is going to continue to go in the direction that created that low bond price, which I believe it will.

***The lock recommendations represent the author's opinion.  In general, if you believe economic and technical factors will make bond yields go lower, you should float.  Otherwise, lock if you like the current rates.  The NOTE rate quoted is an example of what's available from the most competitive lenders in the nation.  Depending on your location and qualifications, origination fees may be necessary to obtain this rate.***