Daily Mortgage Rate Lock Advisory

Friday’s bond market has opened in positive territory again after this morning’s economic data failed to give us any major surprises. Contributing to today’s early bond strength is a weak opening for stocks that has the Dow down 131 points and the Nasdaq down 32 points. The bond market is currently up 13/32, which with yesterday’s late strength should improve this morning’s mortgage rates by approximately .500 of a discount point compared to yesterday’s morning rates.

The Labor Department gave us today’s most important data with the release of July’s Consumer Price Index (CPI). They reported that the overall index was unchanged form June’s level and that the core data reading rose 0.1%. Both of these readings matched forecasts, indicating that consumer prices remain in-check last month. But the index has fallen 2.1% over the past 12 months, matching the largest year-over-year decline since 1950. That is good news for bonds because it means that inflation is not currently a threat to the economy. Inflation erodes the value of a bond’s future fixed interest payments, leading to higher mortgage rates. When inflation concerns are low, bonds are usually more appealing to investors. As bonds are bought, their prices rise, pushing their yields and mortgage rates lower.

The second report of the day was Industrial Production data for July. It showed a 0.5% increase in output and U.S. factories, mines and utilities. Analysts were expecting to see a 0.4% rise, meaning manufacturing activity was slightly stronger than expected.
This can be considered negative for bonds, but the minimal size of the variance and the fact that this data is not extremely important to the markets has prevented it from affecting this morning’s mortgage pricing. The final report of the week was the University of Michigan’s Index of Consumer Sentiment for August late this morning. It gave us a reading of 63.2 that was well below forecasts of a 69.0 that was expected. That indicates that consumers were less optimistic about their own financial situations than many had thought. This is good news for bonds because falling confidence usually translates into weaker levels of consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely.

Yesterday’s 30-year Bond auction went fairly well, leading to higher bonds prices during afternoon trading Thursday. This caused some lenders to revise their rates slightly lower late yesterday, while others may have waited until this morning to reflect those changes.

Next week is relative light in terms of economic releases, at least if comparing to the last two weeks. There is no relevant data scheduled to be posted Monday, but we will get another important inflation reading later in the week. Look for more 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…
Lock 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.

Rate Lock Advisory – Friday Mar. 13th

Friday’s bond market has opened in negative territory following a strong open in stocks and comments made by China that raised concerns of potential selling in bonds. However, stocks have since given back their earlier gains. The Dow is now nearly unchanged while the Nasdaq is now down 7 points. The bond market is currently down 26/32, but strength yesterday will likely keep this morning’s mortgage rates close to yesterday’s levels.

The first of today’s two economic reports was January’s Goods and Services Trade Balance report. It showed that the U.S. trade deficit fell to $36.0 billion in January. This was lower than forecasts of a $38.0 billion deficit, but this data usually does not have a major influence on bonds or mortgage rates.

The second report of the morning was the University of Michigan’s Index of Consumer Sentiment for March. It showed a reading of 56.6 that was a little higher than the 55.0 that was expected and a slight increase f rom February’s final reading. This means that consumer confidence was a little stronger than expected. That can be considered bad news for mortgage rates, but since the variance was minor it has not impacted trading this morning.

The comments made by China has some traders believing that they may begin to sell holdings in the near future. Since they hold approximately $727 billion of U.S. debt, or 6% of the total outstanding debt, a selling campaign would likely drive prices lower. Accordingly, traders are taking a cautious approach this morning.

Next week brings us the release of several important reports, including key inflation readings and another FOMC meeting. There is relevant data scheduled for release Monday when February’s Industrial Production data will be posted. Look for more 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.
©Mortgage Commentary 2009

Rate Lock Advisory – Sunday Mar. 8th

This week brings us the release of three economic releases for the bond and mortgage markets to digest along with 10-year Treasury Note and 30 year Bond auctions. All of the data will be posted the latter part of the week. Only one of the three reports is considered to be of high importance to the markets, but this does not mean that we can expect to see a quiet week in mortgage rates. We could very well see the most movement in rates the latter part of the week, but rates are likely to move several days this week.

The most important of the three reports will be posted Thursday morning when February’s Retail Sales data is released. This report is extremely important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, data that is related usually has a big impact on the financial markets. This month’s report is expected to show a decline in sales of approximately 0.4%. If it reveals a larger decline in sales, the bond market should rise and mortgage rates will likely fall. If it reveals an increase, I expect to see bond prices fall and mortgage rates rise Thursday morning.

There will be two economic reports posted Friday morning. The first is the release of January’s Goods and Services Trade Balance. This report gives us the size of the U.S. trade deficit. It is the week’s least important piece of news and likely will not influence mortgage rates much.

Also on tap Friday is the University of Michigan’s Index of Consumer Sentiment for March at 9:45 AM. This index gives us a measurement of consumer willingness to spend. If confidence is rising, then consumers are more apt to make large purchases. This helps fuel consumer spending and economic growth. A drop in confidence will probably hurt the stock markets and boost bond prices, leading to lower mortgage rates. If the index rises, indicating that confidence is rising and spending w ill likely rise, we may see mortgage rates move higher late Friday morning. It is expected to show a reading of 56.3.

Overall, it will likely be another active week in the mortgage market. Thursday will probably be the most important day of the week with the Retail Sales report due. The 10-year Treasury Note auction is scheduled for Wednesday while the 30-year bond sale will be held Thursday. Results of both sales will be posted at 1:00 PM ET on the sale days. If investor demand was high, we may see bonds rally during afternoon trading, however, weak demand could lead to selling and an increase to mortgage rates. But I am expecting to see the most movement in rates the latter part of the week regardless of the auction results.

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 closing was taking place between 21 an d 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 2009

Rate Lock Advisory – Friday Feb. 27th

Friday’s bond market has opened in negative territory again despite weaker than expected economic news. The stock markets are also showing early losses with the Dow down 74 points and the Nasdaq down 2 points. The bond market is currently down 11/32, which will likely push this morning’s mortgage rates higher by approximately .125 of a discount point.

Today’s big news was the first revision to the 4th Quarter GDP that showed a sizable downward revision from last month’s preliminary estimate. Today’s release revealed that the GDP, which is the sum of all goods and services produced in the U.S. and is considered to be the best measurement of economic activity, actually shrank at 6.2% annual pace. This was much weaker than the negative 3.8% that was released last month and weaker than the 5.2% decline that was forecasted for this revision. This was also the worst quarterly reading in 26 years. That indicates that the economy was weaker than many had thought .

Generally speaking, today’s headline reading was good news for bonds and mortgage rates. The problem came in a key inflation reading in the report that went from a 0.1% decline to a 0.5% gain, meaning that despite the drop in activity there still remains a concern about inflation. That has contributed to this morning’s bond loss along with further debt supply concerns that are coming as a result of the Fed’s revised holdings in banking giant Citigroup.

The University of Michigan’s revised Index of Consumer Sentiment for February was also posted this morning. It showed a reading of 56.3, which was little change from this month’s previous estimate of 56.2. This news had little impact on today’s trading or mortgage pricing.

Next week is pretty busy with economic releases scheduled for four of the five trading days. The week’s kicks off with the release of two reports- January’s Personal Income and Outlays along with February’s ISM Manufact uring Index. Both will be posted Monday morning and can influence bond trading and mortgage rates.

There is important data being posted everyday of the week except Tuesday. Look for more 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.

Rate Lock Advisory – Friday Feb. 13th

Friday’s bond market has opened well in negative territory despite the release of weaker than expected results in today’s only economic news. The stock markets are flat during early trading with the Dow up 2 points and the Nasdaq is up 4 points. The bond market is currently down 20/32, which will likely push this morning’s mortgage rates higher by approximately .250 of a discount point.

The University of Michigan Index of Consumer Sentiment was today’s only relevant data on the schedule. It showed a reading of 56.2 that was well below forecasts of 60.2. This indicates that consumers were much less optimistic about their own financial situations than analysts had expected. That is good news for bonds and mortgage rates because it usually means that consumers are less likely to make large purchases in the near future.

Today’s weakness is due to attention turning back to the amount of debt expected to be brought to market to fund the economic stim ulus package that is being considered by Congress. With an approval seeming like a good possibility, the potential new supply for government debt has traders concerned.

Also contributing to this morning’s weakness may be an expectation of a stock rally once the approvals are announced. That would create a scenario that makes stocks more appealing to investors and lead to a shift in funds from bonds to stocks. It appears that the selling in bonds may be in part a move by some traders as an effort to get back into stocks if the plan is approved.

There is an early close in the bond market today ahead of Monday’s President’s Day Holiday, but I don’t think it will negative affect bonds or mortgage rates today. The financial markets will be closed Monday and will reopen Tuesday for normal trading hours.

Next brings us the release of a couple of important reports including two key inflation readings. None of the important data is scheduled for r elease Tuesday, 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… Lock 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.

Rate Lock Advisory – Thursday Feb. 12th

Thursday’s bond market has opened in negative territory following the release of stronger than expected economic news. The stock markets are showing early losses with the Dow down 125 points and the Nasdaq is down 6 points. The bond market is currently down 8/32, which will likely push this morning’s mortgage rates higher by approximately .125 – .250 of a discount point.

Today’s big economic news was January’s Retail Sales data. It showed an unexpected surprise in sales, indicating that consumers were spending much more than thought. The data revealed a 1.0% rise in sales from December’s revised decline of 3.0%. Analysts were expecting to see a drop in sales, so there was a large variance between forecasts and the actual reading. This has pushed bond prices lower this morning and contributed to today’s increase in mortgage pricing.

The Labor Department gave us weekly unemployment claim numbers this morning also. They reported that new claims f ell from a revised total of 631,000 the previous week to 623,000 last week. However, analysts were expecting to see that 610,000 new claims for benefits were filed, meaning claims were higher than expected. This can be considered good news for bonds, but the sales data is much more important to the markets than weekly unemployment claims. Therefore, it has been a much bigger influence on today’s rates than this report has been.

February’s preliminary reading to the University of Michigan Index of Consumer Sentiment will be released late tomorrow morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. If it shows an increase in consumer confidence, the stock markets may move higher and bond prices could fall. It is currently expected to show a reading of 60.2, which would be a decline from January’s final reading of 61.2 and indicate that consumers were less optimistic about their own financial situati ons than last month. This would be good news for bonds and mortgage rates, but after this morning’s surprise in retail level sales it will be interesting to see how accurate forecasts were.

Also worth noting is an early close in the bond market tomorrow ahead of Monday’s President’s Day Holiday. The financial markets will be closed Monday and will reopen Tuesday for normal trading hours.

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.

Rate Lock Advisory – Friday Jan. 30th

Friday’s bond market has opened in positive territory following early stock weakness and mixed economic news. The stock markets are showing sizable losses with the Dow down 154 points and the Nasdaq down 20 points. The bond market is currently up 10/32, but we will still see a sizable increase in this morning’s mortgage rates due to significant weakness in bonds yesterday afternoon. We will likely see an increase of approximately .500 – .625 of a discount point over yesterday’s morning rates.

Today brought us the release of three relevant reports, including the very important preliminary GDP reading that showed a decline of 3.8% during the 4th quarter of last year. This was not as big of a drop as was expected, but was still the largest quarterly decline in 26years. This can be considered bad news for bonds because the drop was not as much as expected, however, it still being the worst quarter since 1982 indicates a weak economy. That generally makes bo nds more attractive to investors and leads to lower mortgage rates. Unfortunately, it was not enough to offset yesterday’s losses or the fact that economy activity was actually stronger than expected.

The 4th Quarter Employment Cost Index (ECI) was also posted this morning, but it came in lower than forecasts. The 0.5% increase compared to the 0.7% that was expected, means that employer costs for wages and benefits did not rise as much as thought. That is good news for bonds because it eases concerns of wage inflation.

The third report was the revised reading to the University of Michigan’s Index of Consumer Sentiment. It showed a reading of 61.2 that was slightly lower than the 61.9 that the preliminary reading showed earlier this month.

Next week is packed with important and relevant economic data for the markets to digest. It begins with December’s Personal Income and Outlays data and January’s Institute for Supply Management’s (ISM) manufacturing index Monday. The week closes with the almighty Employment report Friday morning and in between are several important releases. Look for more details on next weeks 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.

Rate Lock Advisory – Friday Jan. 16th

Friday’s bond market has opened down sharply following the release of mixed economic news and concerns about future sales of related securities. The stock markets are mixed with the Dow up 13 points and the Nasdaq down 3 points. The bond market is currently down 45/32, which will likely push this morning’s mortgage rates higher by approximately .375 of a discount point.

There were three economic reports released this morning with the most important coming first. The Labor Department said that the overall reading in December’s Consumer Price Index (CPI) fell 0.7% when it was expected to fall 0.9%. However, the more important core data reading was unchanged from November’s level when it was forecasted to rise 0.1%. This means that food and energy costs did not fall as much at the consumer level of the economy as was expected. The good news is that other prices did not rise.

December’s Industrial Production report was next with a surprising drop in output of 2.0%. This was more than twice the decline that analysts were expecting. This, and a large downward revision to November’s output, indicates that output at U.S. factories, mines and utilities are spiraling lower. This is not good news for the economy, but is generally taken as favorable for bonds and mortgage rates.

The final report of the week was January’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment that showed a higher level of sentiment than was expected. The reading of 61.9 was an increase from December’s final reading and stronger than the decline to 59.8 that was expected. This indicates that consumer willingness to spend may be rising, which is not considered to be good news for bonds.

Today’s data has not seemed to heavily influence bond trading and mortgage rates this morning. What seems to be driving bonds lower this morning is concern that more economic stimulus and government bailout f unds are going to require a significant increase in the amount of debt the government will need to sell in the near future. That additional supply weakens demand for current securities in the market. Unfortunately, this issue may come to light more often in the coming weeks. Hopefully the concern over corporate earnings and economic weakness will help fuel investor appetite for mortgage related bonds. If not, we may see mortgage rates begin an upward trend.

Next week brings us very little economic data for the markets to digest. There is nothing of interest or relevance Monday that needs to be noted today. It will be a very quite week in terms of economic releases, but as we have seen many times in the past this is not a guarantee that we will have a calm week in mortgage rates. Look for a summary of next week’s events and expectations 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… Lock 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.

Rate Lock Advisory – Tuesday Dec. 23rd

Tuesday’s bond market has opened flat after this morning’s economic data failed to show any major surprises. The stock markets are reacting similarly with the Dow down 16 points and the Nasdaq nearly unchanged from yesterday’s close. The bond market is also practically unchanged but we will still see an increase in this morning’s rates of approximately .250 – .375 of a discount point.

The first of today’s four reports was the final revision to the 3rd Quarter GDP that showed a 0.5% decline. This matched forecasts but was not likely to significantly impact mortgage pricing anyhow. The data is quite aged by now and next month we get the initial reading on this quarter’s activity, so analysts do not pay much attention to this version of the report unless it varies greatly from forecasts.

November’s Existing and New Home Sales reports were both posted this morning and both revealed larger than expected drops in sales. This indicates that the housin g sector is still softening and not near the ?floor? that many are attempting to predict. However, this is good news for bonds and mortgage rates because a weakening housing sector will make slow the economic recovery and keeps inflation fears to a minimal.

The last report of the day did reveal a higher than expected level of consumer sentiment. The University of Michigan’s Index of Consumer Sentiment for December was revised and showed a higher level of sentiment than the previous estimate. The reading of 60.1 means that consumers were more optimistic about their own financial situation than many had thought. This is considered bad news for bonds because rising sentiment means that consumers are more apt to make large purchase sin the near future. Still, this report ha snot had a significant impact ton today’s trading.

The last event of the day is the 5-year Treasury Note auction. If the sale is met with a decent demand from investors, we could se e interest in other notes and bonds such as mortgage-related bonds increase during afternoon trading. But, a lackluster interest from investors may also lead to weakness in bonds and possible upward afternoon revisions to mortgage pricing.

Tomorrow morning brings us the release of November’s Durable Goods Orders and the Personal Income and Outlays report. The Durable Goods Orders report tracks new orders for big-ticket items and is expected to show a drop of 3.1%. The Income and Outlays report is likely to show that personal income was unchanged from October and that spending fell 0.8% last month. Weaker readings would be good news for the bond market and mortgage rates.

Also worth noting is an early close tomorrow ahead of the Christmas Day holiday. The markets will be closed Thursday in observance of the holiday but will be open Friday. The bond market will close early Friday also. However, I am expecting to see a very quiet couple of days as many traders are home for the holidays.

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… 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.

Rate Lock Advisory – Monday Dec. 22nd

Monday’s bond market has opened flat with no relevant economic news on tap for today and a fairly uneventful morning in stocks. The stock markets are showing losses, but they can be considered pretty minor compared to recent sessions. The Dow is currently down 17 points while the Nasdaq has lost 20 points. The bond market is currently unchanged from Friday’s close, which should keep this morning’s mortgage pricing near Friday’s levels.

The rest of the week brings us the release of six monthly or quarterly economic reports and a fairly important Treasury auction tomorrow. Most of the data being released is not considered to be of high importance to the markets, but with the Christmas holiday falling during the week we can expect very thin trading. We also may see profit-taking by some firms to capture the sizable gains in bonds this year as it winds down, so by no means can we be guaranteed a quiet week.

There is no relevant economic news schedul ed for release today, but four of the week’s reports are scheduled to be posted tomorrow. The first is the final revision to the 3rd Quarter GDP. I don’t think this data will have an impact on mortgage rates unless it varies greatly from its expected reading. Last month’s first revision showed that the economy contracted at a 0.5% annual pace during the quarter and this month’s revision is expected to show the same.

The next two are November’s Existing and New Home Sales reports. The Existing Home Sales release will come from the National Association of Realtors while the New Home Sales data is a Commerce Department report. Both give us a measurement of housing sector strength and mortgage credit demand, however, neither are considered to be of high importance. Both of the reports are expected to show a drop in sales.

The fourth report of the day also comes late morning when the revised University of Michigan Index of Consumer Sentiment for December is posted. Current forecasts are calling for a small downward revision from the preliminary reading of 59.1. This is important because rising consumer confidence indicates that consumers may be more apt to make large purchases in the near future. An unexpected upward revision could lead to higher mortgage rates tomorrow.

The last event tomorrow is the 5-year Treasury Note auction. If the sale is met with a decent demand from investors, we could see interest in other notes and bonds such as mortgage-related bonds increase during afternoon trading. But, a lackluster interest from investors may also lead to weakness in bonds and possible upward afternoon revisions to mortgage pricing.

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… Float if my closing was taking pl ace 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.