As expected, today's FOMC meeting has adjourned with no change to key short-term interest rates. However, the post-meeting statement did give us some favorable news that has helped boost bond prices this afternoon. The Fed indicated that they have concern about the pace of the economic recovery and that they are more worried that product prices will fall rather than increase, which means inflation is of little concern at this point. They also changed the verbiage used from the previous meeting to give a strong signal that they are prepared to use more stimulus to keep the economy moving in the right direction.
Their concerns underscore some theories that we will not see key short-term rates raised anytime soon. Some analysts felt rates had to be bumped higher to ease a potential spike in inflation later when the economy gains some traction. However, today's statement means that the Fed does not share that concern, which is great news for the bond market and mortgage pricing. A slow economic expansion with few signs of and little concern about inflation creates an extremely favorable environment for long-term securities such as mortgage-related bonds. These securities just became more appealing to investors because it is apparent that interest rates will remain low for some time and that the bond market's number one nemesis (inflation) is of no concern to the Federal Reserve.
We really could not ask for a better statement from the Fed other than a specific commitment to inject funds into government securities and mortgage bonds. The news caused come fluctuation in stock prices, but the major stock indexes are now close to pre-announcement levels. However, the bond market has made a nice run from earlier levels, currently standing up 31/32. This should create downward revisions to mortgage rates of approximately .125 - .250 of a discount point from this morning' s rates.
This morning's only factual economic data was August's Housing Starts that showed surprising strength in new home building. Analysts were expecting to see a minor increase in starts but the 10.5% jump that today's report revealed was well above forecasts. This can be considered a sign of housing strength, but since this data is not looked at as a major release, its impact on today's bond trading and mortgage pricing has been minimal.
There is no relevant economic data scheduled for release tomorrow, so we can expect to see the stock markets influence bond trading and mortgage rates. I would not be surprised to see this afternoon's bond rally extend into tomorrow's trading. The fact that there is no relevant economic data on tap tomorrow makes this even more likely, meaning that we may see further improvements to rates tomorrow morning.
There are two monthly reports scheduled for release Thursday in addition to weekly unemployme nt figures from the Labor Department. None of the three reports are likely to cause significant movement in mortgage rates, but if all show favorable results we could see some pricing improvements as a result.
If I were considering financing/refinancing a home, I would.... Float 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.
Tuesday, September 21, 2010
Wednesday, July 7, 2010
Market Update
Tuesday's bond market has opened up slightly despite sizable stock gains. The stock markets are kicking the week off with a post-holiday rally that has the Dow up 128 points and the Nasdaq up 34 points. The bond market is currently up 3/32, which should keep this morning's mortgage rates at Friday's levels.
The Institute for Supply Management (ISM) reported late this morning that their service sector index fell to 53.8 last month, down from 55.4 in May. Analysts were expecting to see a reading of 55.0, meaning that more surveyed businesses in the service sector felt business worsened during the month than last month. This is basically good news for the bond market and mortgage rates, but it was not enough of a variance from forecasts to have an impact on this morning's mortgage pricing.
The rest of the week is extremely light in terms of relevant economic reports or events that may affect mortgage rates. The only other economic data worth menti oning is Thursday's weekly unemployment figures from the Labor Department. This release usually has little influence on bond trading or mortgage rates, but with a lack of important data scheduled for release this week it may draw more attention than usual. Analysts are expecting to see that approximately 460,000 new claims for benefits were filed last week. The higher the total of new claims, the better the news for bonds and mortgage rates.
Overall, I am expecting to see a fairly quiet week in mortgage rates, especially if comparing to recent weeks. It is very difficult to label any particular day as the most important of the week with so little to influence trading. I suspect that the stock markets will be the biggest influence on trading and mortgage pricing, but if today's reaction is any indication of what to expect the next couple days, it will certainly be a quiet week for mortgage rates.
If I were considering financing/refinancing a home, I w ould.... 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.
©Mortgage Commentary 2010
The Institute for Supply Management (ISM) reported late this morning that their service sector index fell to 53.8 last month, down from 55.4 in May. Analysts were expecting to see a reading of 55.0, meaning that more surveyed businesses in the service sector felt business worsened during the month than last month. This is basically good news for the bond market and mortgage rates, but it was not enough of a variance from forecasts to have an impact on this morning's mortgage pricing.
The rest of the week is extremely light in terms of relevant economic reports or events that may affect mortgage rates. The only other economic data worth menti oning is Thursday's weekly unemployment figures from the Labor Department. This release usually has little influence on bond trading or mortgage rates, but with a lack of important data scheduled for release this week it may draw more attention than usual. Analysts are expecting to see that approximately 460,000 new claims for benefits were filed last week. The higher the total of new claims, the better the news for bonds and mortgage rates.
Overall, I am expecting to see a fairly quiet week in mortgage rates, especially if comparing to recent weeks. It is very difficult to label any particular day as the most important of the week with so little to influence trading. I suspect that the stock markets will be the biggest influence on trading and mortgage pricing, but if today's reaction is any indication of what to expect the next couple days, it will certainly be a quiet week for mortgage rates.
If I were considering financing/refinancing a home, I w ould.... 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.
©Mortgage Commentary 2010
Tuesday, July 6, 2010
Mortgage Commentary
This holiday-shortened week brings us little economic data to drive the markets and mortgage rates. There are no reports scheduled this week that can be considered important. This makes it quite likely that the stock markets will have the biggest influence on the bond market and mortgage pricing the next several days.
The first piece of data comes late Tuesday morning when the Institute for Supply Management (ISM) will post their Services Index for June. This index is somewhat similar to last week's ISM Manufacturing Index but tracks sentiment at the services level. It has the potential to impact bond trading and mortgage rates if it shows a sizable variance from forecasts, particularly when little other data is being posted. However, it usually has little influence on mortgage pricing and cannot be considered a key report. Current forecasts are calling for a reading of 55.0, which would be a small decline from May's reading.
The only other ec onomic data worth mentioning is Thursday's weekly unemployment figures from the Labor Department. This release usually has little influence on bond trading or mortgage rates, but with a lack of important data scheduled for release this week it may draw more attention than usual. Analysts are expecting to see that approximately 460,000 new claims for benefits were filed last week. The higher the total of new claims, the better the news for bonds and mortgage rates.
Overall, I am expecting to see a fairly quiet week in mortgage rates, especially if comparing to recent weeks and the stock markets don't rally or go into a sell-off. The U.S. financial and mortgage markets are closed tomorrow in observance of the Independence Day holiday. They will reopen Tuesday morning for regular trading hours, but with little data and no other relevant events on tap this week, it is difficult to say which day will be the most important of the week.
If I were cons idering 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.
©Mortgage Commentary 2010
The first piece of data comes late Tuesday morning when the Institute for Supply Management (ISM) will post their Services Index for June. This index is somewhat similar to last week's ISM Manufacturing Index but tracks sentiment at the services level. It has the potential to impact bond trading and mortgage rates if it shows a sizable variance from forecasts, particularly when little other data is being posted. However, it usually has little influence on mortgage pricing and cannot be considered a key report. Current forecasts are calling for a reading of 55.0, which would be a small decline from May's reading.
The only other ec onomic data worth mentioning is Thursday's weekly unemployment figures from the Labor Department. This release usually has little influence on bond trading or mortgage rates, but with a lack of important data scheduled for release this week it may draw more attention than usual. Analysts are expecting to see that approximately 460,000 new claims for benefits were filed last week. The higher the total of new claims, the better the news for bonds and mortgage rates.
Overall, I am expecting to see a fairly quiet week in mortgage rates, especially if comparing to recent weeks and the stock markets don't rally or go into a sell-off. The U.S. financial and mortgage markets are closed tomorrow in observance of the Independence Day holiday. They will reopen Tuesday morning for regular trading hours, but with little data and no other relevant events on tap this week, it is difficult to say which day will be the most important of the week.
If I were cons idering 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.
©Mortgage Commentary 2010
Wednesday, June 9, 2010
Market Commentary
Wednesday's bond market has opened in negative territory again following early stock strength. The stock markets are showing sizable gains with the Dow up 113 points and the Nasdaq up 30 points. The bond market is down 12/32 as investors shift funds into stocks. However, due to some improvements in bond prices late yesterday, we should see little change in this morning's mortgage rates.
Fed Chairman Bernanke's statement to the House Budget Committee was the only relevant news this morning. He reiterated similar comments made Monday evening that helped influence trading yesterday. He said this morning that the U.S. economic recovery is moving in the right direction and that the European financial crisis will have a "moderate" impact on it but will not derail it. He mentioned that the employment and housing sectors are still of concern but his words seem to have reassured the markets that all will be well eventually.
The Fed will post its' Beige Book report at 2:00 PM ET this afternoon. This report is named simple for the color of its cover, but contains details about economic conditions throughout the U.S. by region. It is relied upon heavily by the Federal Reserve to determine monetary policy during their FOMC meetings. If it shows much stronger economic activity than its last release, we could see mortgage rates rise this afternoon. Particularly if the report indicates inflation is growing.
We also have to watch for the results of today's 10-year Treasury Note auction. Results the sale will be posted at 1:00 PM ET. If investor demand was high for the Notes, we may see bonds rally during afternoon trading, however, weak demand could lead to broader selling in bonds and an increase to mortgage rates.
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... Float if my closi ng 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.
©Mortgage Commentary 2010
Fed Chairman Bernanke's statement to the House Budget Committee was the only relevant news this morning. He reiterated similar comments made Monday evening that helped influence trading yesterday. He said this morning that the U.S. economic recovery is moving in the right direction and that the European financial crisis will have a "moderate" impact on it but will not derail it. He mentioned that the employment and housing sectors are still of concern but his words seem to have reassured the markets that all will be well eventually.
The Fed will post its' Beige Book report at 2:00 PM ET this afternoon. This report is named simple for the color of its cover, but contains details about economic conditions throughout the U.S. by region. It is relied upon heavily by the Federal Reserve to determine monetary policy during their FOMC meetings. If it shows much stronger economic activity than its last release, we could see mortgage rates rise this afternoon. Particularly if the report indicates inflation is growing.
We also have to watch for the results of today's 10-year Treasury Note auction. Results the sale will be posted at 1:00 PM ET. If investor demand was high for the Notes, we may see bonds rally during afternoon trading, however, weak demand could lead to broader selling in bonds and an increase to mortgage rates.
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... Float if my closi ng 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.
©Mortgage Commentary 2010
Tuesday, June 1, 2010
Market Commentary
This holiday-shortened week brings us the release of five important economic reports for the markets to digest. Two of the five are considered to be of very high importance to the bond market and mortgage rates. The remaining reports are considered to be of moderate importance to the markets. The financial and mortgage markets will be closed tomorrow in observance of the Memorial Day holiday and will reopen Tuesday morning.
The Institute for Supply Management's (ISM) manufacturing index will be posted late Tuesday morning. This highly important index measures manufacturer sentiment. A reading above 50 means that more surveyed manufacturing executives felt that business improved during the month than those who felt it had worsened. Analysts are expecting to see a 58.9 reading in this month's release, meaning that sentiment fell slightly during May. A smaller reading will be good news for the bond market and mortgage shoppers while an unexpected increase could contribute to higher mortgage rates Tuesday.
There is no relevant data scheduled for release Wednesday, making it the best candidate for the least important day of the week. This is no guarantee that we will not see a change in mortgage rates Wednesday, but it will likely be much less active than some of the other days.
The revised 1st Quarter Productivity and Costs data is the first of three reports that will be released Thursday morning. This data measures employee output and employer costs for wages and benefits. It is considered to be a measurement of wage inflation. It is believed that the economy can grow with low inflationary pressures when productivity is high. Last month's preliminary reading revealed a 3.6% increase, but I don't think this piece of data will have much of an impact on the bond market or mortgage pricing unless it varies greatly from its forecasted revised reading of 3.4%.
The second releas e of the day will come from the Commerce Department, who will post April's Factory Orders data during late morning trading. This manufacturing sector report is similar to last week's Durable Goods Orders release, but also includes orders for non-durable goods. It can cause some movement in the financial markets if it varies from forecasts by a wide margin, but it isn't expected to cause much change in rates this month. Current forecasts are calling for an increase in orders of 1.7%.
The third report of the day may have a noticeable impact on the markets or be a non-factor depending on its results. The Institute for Supply Management will release its services index late Thursday morning. It is expected to show a reading of 55.5, with the same principals as Tuesday's manufacturing index. If this reading varies greatly from forecasts, we may see volatility in the markets and mortgage rates. However, if its results are in the general area of expec tations, it will likely have no influence on the markets and mortgage pricing Thursday.
Friday's sole report is arguably the single most important report that we see each month. The Labor Department will post May's Employment data early Friday morning. This report gives us key employment readings such as the U.S. unemployment rate and the number of jobs added or lost during the month. Analysts are expecting to see the unemployment rate slip from 9.9% in April to 9.8% this month with approximately 500,000 jobs added to the economy during the month. A higher than expected unemployment rate and a smaller number than 500,000 in new payrolls would be great news for the bond market. It would probably create a sizable rally in bonds, leading to lower mortgage rates Friday. However, stronger than expected numbers may lead to a spike in mortgage rates Friday morning.
Overall, Tuesday or Friday are likely to be the most important days of the week as they bring us the two most important reports on the agenda. If they give us weaker than expected results, we could close the week with lower mortgage rates than Tuesday's opening levels. However, if we see stronger than expected readings in those two releases, I expect mortgage rates to move higher on the week. But that is very much dependant on seeing a relatively calm week in stocks. As we have seen the past two weeks, the overseas concerns and stock market volatility can heavily influence bond trading and mortgage rates and significantly minimize the impact that these economic reports normally have on rates. Accordingly, it would be wise to maintain contact with your mortgage professional if still floating an interest rate.
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 c losing 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.
©Mortgage Commentary 2010
The Institute for Supply Management's (ISM) manufacturing index will be posted late Tuesday morning. This highly important index measures manufacturer sentiment. A reading above 50 means that more surveyed manufacturing executives felt that business improved during the month than those who felt it had worsened. Analysts are expecting to see a 58.9 reading in this month's release, meaning that sentiment fell slightly during May. A smaller reading will be good news for the bond market and mortgage shoppers while an unexpected increase could contribute to higher mortgage rates Tuesday.
There is no relevant data scheduled for release Wednesday, making it the best candidate for the least important day of the week. This is no guarantee that we will not see a change in mortgage rates Wednesday, but it will likely be much less active than some of the other days.
The revised 1st Quarter Productivity and Costs data is the first of three reports that will be released Thursday morning. This data measures employee output and employer costs for wages and benefits. It is considered to be a measurement of wage inflation. It is believed that the economy can grow with low inflationary pressures when productivity is high. Last month's preliminary reading revealed a 3.6% increase, but I don't think this piece of data will have much of an impact on the bond market or mortgage pricing unless it varies greatly from its forecasted revised reading of 3.4%.
The second releas e of the day will come from the Commerce Department, who will post April's Factory Orders data during late morning trading. This manufacturing sector report is similar to last week's Durable Goods Orders release, but also includes orders for non-durable goods. It can cause some movement in the financial markets if it varies from forecasts by a wide margin, but it isn't expected to cause much change in rates this month. Current forecasts are calling for an increase in orders of 1.7%.
The third report of the day may have a noticeable impact on the markets or be a non-factor depending on its results. The Institute for Supply Management will release its services index late Thursday morning. It is expected to show a reading of 55.5, with the same principals as Tuesday's manufacturing index. If this reading varies greatly from forecasts, we may see volatility in the markets and mortgage rates. However, if its results are in the general area of expec tations, it will likely have no influence on the markets and mortgage pricing Thursday.
Friday's sole report is arguably the single most important report that we see each month. The Labor Department will post May's Employment data early Friday morning. This report gives us key employment readings such as the U.S. unemployment rate and the number of jobs added or lost during the month. Analysts are expecting to see the unemployment rate slip from 9.9% in April to 9.8% this month with approximately 500,000 jobs added to the economy during the month. A higher than expected unemployment rate and a smaller number than 500,000 in new payrolls would be great news for the bond market. It would probably create a sizable rally in bonds, leading to lower mortgage rates Friday. However, stronger than expected numbers may lead to a spike in mortgage rates Friday morning.
Overall, Tuesday or Friday are likely to be the most important days of the week as they bring us the two most important reports on the agenda. If they give us weaker than expected results, we could close the week with lower mortgage rates than Tuesday's opening levels. However, if we see stronger than expected readings in those two releases, I expect mortgage rates to move higher on the week. But that is very much dependant on seeing a relatively calm week in stocks. As we have seen the past two weeks, the overseas concerns and stock market volatility can heavily influence bond trading and mortgage rates and significantly minimize the impact that these economic reports normally have on rates. Accordingly, it would be wise to maintain contact with your mortgage professional if still floating an interest rate.
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 c losing 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.
©Mortgage Commentary 2010
Monday, May 24, 2010
This week brings us the release of seven important economic reports or news releases in addition to two Treasury auctions that may influence rates. Three of the seven are considered to be of fairly high importance to the bond market and mortgage pricing. The remaining reports are considered to be of moderate or low importance to the markets.
The National Association of Realtors will give us the Existing Home Sales report late tomorrow morning. This data tracks resales of homes in the U.S. during April, giving us a measurement of housing sector strength. However, it is not considered to be of much importance to the bond market unless it varies greatly from forecasts. Current forecasts are calling for a moderate increase in sales between March and April.
The Conference Board will start the week's more important releases by posting their Consumer Confidence Index (CCI) at 10:00 AM Tuesday. This is one of the more important releases of the week because is measures consumer willingness to spend. If the index rises, it indicates that consumers feel better about their personal financial situations and are more apt to make large purchases. If confidence is sliding, analysts think consumer spending may slow in the near future. The latter is good news for the bond market because consumer spending makes up two-thirds of the U.S. economy. A decline should boost bond prices and push mortgage rates lower Tuesday morning. It is expected to show a reading of 58.3 after April's 57.9 reading.
We will get two monthly reports Wednesday morning. The more important of the two is April's Durable Goods Orders data. This report gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket products. It is currently expected to show an increase in new orders of approximately 1.4%. If this report shows a larger than expected rise, we should see mortgage rates move highe r because it indicates manufacturing growth. If it shows a smaller than expected increase, we could see rates improve Wednesday.
April's New Home Sales data will be released late Wednesday morning. This report gives us a measurement of housing sector strength and future mortgage credit demand. However, it is actually the least important release of the week and probably will not have much of an impact on mortgage pricing. It is expected to show an increase in sales.
The first of two revisions to the 1st quarter Gross Domestic Product (GDP) will be released at 8:30 AM Thursday. The second revision to this report comes next month but isn't expected to have much of an impact on the financial markets. The GDP is the sum of all goods and services produced in the U.S. and is considered to be the best indicator of economic growth. Last month's preliminary reading revealed a 3.2% increase in the annual rate of growth. Analysts expect a sligh t upward revision to this reading with the consensus being a 3.3% rate of growth. If the upward revision is much stronger than expected, we may see the bond market react negatively and mortgage rates move higher.
April's Personal Income and Outlays data is the first of two reports due Friday. It will be posted at 8:30 AM and gives us an indication of consumer ability to spend and current spending habits. An increase in income means that consumers have more money available to spend. Since consumer spending makes up two-thirds of the U.S. economy, this data can cause movement in the financial markets and mortgage rates. Current forecasts are showing a 0.4% increase in income and a 0.3% rise in spending. Weaker readings would be considered good news for bonds and mortgage rates.
The second report of the day and the last relevant data of the week will come from the University of Michigan who will update their Index of Consumer Sentimen t for May. It is forecasted to show a small increase from this month's preliminary reading of 73.3. A reading above 73.7 would be considered negative for bonds.
Overall, I think we have a busy week ahead of us. The big reports of the week are Tuesday's CCI and Wednesday's Durable Goods Orders. If Thursday's GDP revision varies greatly from forecasts, it can also lead to sizable changes in rates. There are also a couple of Treasury auctions that are worth noting. The 5-year Note sale is Wednesday and the 7-year Note auction on Thursday may influence bond trading and possibly mortgage rates if they are met with an exceptional demand or if there is lackluster interest from investors.
The bond market will close early Friday afternoon ahead of next Monday's Memorial Day holiday. There is a pretty good possibility of seeing mortgage rates change several times this week, especially if there is more volatility in the stock markets, so ple ase proceed extremely cautiously if still floating an interest rate.
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.
©Mortgage Commentary 2010
The National Association of Realtors will give us the Existing Home Sales report late tomorrow morning. This data tracks resales of homes in the U.S. during April, giving us a measurement of housing sector strength. However, it is not considered to be of much importance to the bond market unless it varies greatly from forecasts. Current forecasts are calling for a moderate increase in sales between March and April.
The Conference Board will start the week's more important releases by posting their Consumer Confidence Index (CCI) at 10:00 AM Tuesday. This is one of the more important releases of the week because is measures consumer willingness to spend. If the index rises, it indicates that consumers feel better about their personal financial situations and are more apt to make large purchases. If confidence is sliding, analysts think consumer spending may slow in the near future. The latter is good news for the bond market because consumer spending makes up two-thirds of the U.S. economy. A decline should boost bond prices and push mortgage rates lower Tuesday morning. It is expected to show a reading of 58.3 after April's 57.9 reading.
We will get two monthly reports Wednesday morning. The more important of the two is April's Durable Goods Orders data. This report gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket products. It is currently expected to show an increase in new orders of approximately 1.4%. If this report shows a larger than expected rise, we should see mortgage rates move highe r because it indicates manufacturing growth. If it shows a smaller than expected increase, we could see rates improve Wednesday.
April's New Home Sales data will be released late Wednesday morning. This report gives us a measurement of housing sector strength and future mortgage credit demand. However, it is actually the least important release of the week and probably will not have much of an impact on mortgage pricing. It is expected to show an increase in sales.
The first of two revisions to the 1st quarter Gross Domestic Product (GDP) will be released at 8:30 AM Thursday. The second revision to this report comes next month but isn't expected to have much of an impact on the financial markets. The GDP is the sum of all goods and services produced in the U.S. and is considered to be the best indicator of economic growth. Last month's preliminary reading revealed a 3.2% increase in the annual rate of growth. Analysts expect a sligh t upward revision to this reading with the consensus being a 3.3% rate of growth. If the upward revision is much stronger than expected, we may see the bond market react negatively and mortgage rates move higher.
April's Personal Income and Outlays data is the first of two reports due Friday. It will be posted at 8:30 AM and gives us an indication of consumer ability to spend and current spending habits. An increase in income means that consumers have more money available to spend. Since consumer spending makes up two-thirds of the U.S. economy, this data can cause movement in the financial markets and mortgage rates. Current forecasts are showing a 0.4% increase in income and a 0.3% rise in spending. Weaker readings would be considered good news for bonds and mortgage rates.
The second report of the day and the last relevant data of the week will come from the University of Michigan who will update their Index of Consumer Sentimen t for May. It is forecasted to show a small increase from this month's preliminary reading of 73.3. A reading above 73.7 would be considered negative for bonds.
Overall, I think we have a busy week ahead of us. The big reports of the week are Tuesday's CCI and Wednesday's Durable Goods Orders. If Thursday's GDP revision varies greatly from forecasts, it can also lead to sizable changes in rates. There are also a couple of Treasury auctions that are worth noting. The 5-year Note sale is Wednesday and the 7-year Note auction on Thursday may influence bond trading and possibly mortgage rates if they are met with an exceptional demand or if there is lackluster interest from investors.
The bond market will close early Friday afternoon ahead of next Monday's Memorial Day holiday. There is a pretty good possibility of seeing mortgage rates change several times this week, especially if there is more volatility in the stock markets, so ple ase proceed extremely cautiously if still floating an interest rate.
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.
©Mortgage Commentary 2010
Tuesday, April 27, 2010
Market Commentary
Tuesday's bond market has opened up sharply despite much stronger than expected economic news. Sizable stocks losses are also helping to boost bond prices this morning. The Dow is currently down 131 points while the Nasdaq is down 34 points. The bond market is currently up 20/32, which should improve this morning's mortgage rates by approximately .375 of a discount point. However, I would not be surprised to see further improvements to mortgage rates later today, especially of the stock markets extend their losses or the bond market moves higher than current levels.
The Conference Board gave us today's sole economic data late this morning. They reported that their Consumer Confidence Index (CCI) jumped to 57.9 this month, exceeding forecasts by several points. This means that surveyed consumers were much more optimistic about their own financial situations than many had thought. Normally, this data would have a negative impact on bond trading that would lead to higher mortgage rates. However, the stock selling and concerns about overseas economic situations has drawn a great deal of interest to bonds this morning.
There is no relevant economic data scheduled for release tomorrow, but we do have the FOMC meeting to be concerned with. The two-day meeting will adjourn at 2:15 PM ET tomorrow. There is a wide consensus that the Fed will leave key short-term interest rates unchanged at this meeting, but the post-meeting statement could create some fireworks if it gives any indication of when the Fed may start to raise rates. Market participants will also be looking for any concern about inflation and economic growth expectations. If the statement hints that there is concern about inflation, or if some of the common portions of the verbiage is changed, we could see the markets react heavily during afternoon hours. Whether or not that is good news for mortgage shoppers depends on how the content is construed by tra ders.
We also have the 5-year Treasury Note auction tomorrow. Results of the sale will be posted at 1:00 PM ET. There is a general feeling this morning that the sale may go fairly well. If this turns out to be the case, we may see more improvements to mortgage pricing late tomorrow, assuming that the FOMC meeting doesn't create a negative mood for bonds.
If I were considering financing/refinancing a home, I would.... Float 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.
©Mortgage Commentary 2010
The Conference Board gave us today's sole economic data late this morning. They reported that their Consumer Confidence Index (CCI) jumped to 57.9 this month, exceeding forecasts by several points. This means that surveyed consumers were much more optimistic about their own financial situations than many had thought. Normally, this data would have a negative impact on bond trading that would lead to higher mortgage rates. However, the stock selling and concerns about overseas economic situations has drawn a great deal of interest to bonds this morning.
There is no relevant economic data scheduled for release tomorrow, but we do have the FOMC meeting to be concerned with. The two-day meeting will adjourn at 2:15 PM ET tomorrow. There is a wide consensus that the Fed will leave key short-term interest rates unchanged at this meeting, but the post-meeting statement could create some fireworks if it gives any indication of when the Fed may start to raise rates. Market participants will also be looking for any concern about inflation and economic growth expectations. If the statement hints that there is concern about inflation, or if some of the common portions of the verbiage is changed, we could see the markets react heavily during afternoon hours. Whether or not that is good news for mortgage shoppers depends on how the content is construed by tra ders.
We also have the 5-year Treasury Note auction tomorrow. Results of the sale will be posted at 1:00 PM ET. There is a general feeling this morning that the sale may go fairly well. If this turns out to be the case, we may see more improvements to mortgage pricing late tomorrow, assuming that the FOMC meeting doesn't create a negative mood for bonds.
If I were considering financing/refinancing a home, I would.... Float 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.
©Mortgage Commentary 2010
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