Tuesday's bond market has opened slightly in positive territory as investors wait for today's Fed minutes. The stock markets are showing gains with the Dow up 32 points and the Nasdaq up 4 points. The bond market is currently up 3/32, which is not enough to improve this morning's mortgage rates.
The first report of the week comes this afternoon when the Fed will release the minutes to the last FOMC meeting. These may be a major mover of the markets or could be a non-factor, depending on what they say. The key will be concerns over inflation and the Fed's next move. If the Fed members were concerned about inflationary pressures, we may see the bond market move lower and mortgage rates higher later today. However, if they indicate a likelihood of another rates cut in the coming months, we should see the bond market rise and mortgage rates drop during afternoon trading.
The first factual economic data of the week will be posted Thursday morning. August's Goods and Services Trade Balance will be released that day, but is not likely to cause much of a change in mortgage pricing. This data is actually the week's least important. It will give us the size of the U.S. trade deficit, but usually does not lead to significant movement in bond prices or mortgage rates.
Overall, this is going to be an interesting week for the bond market and mortgage rates. The first part of the week will be left to the stock markets and the Fed minutes. Once we get into the economic data, bond traders will have more factual news to trade on rather than emotion from stock market movements. The most important day of the week is Friday with the Retail Sales and PPI reports, but today's Fed minutes may also lead to a fair amount of volatility this afternoon that could carry into tomorrow's trading.
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.
This week brings us four factual economic reports for the markets to digest. They are all scheduled for release Thursday and Friday, so the first part of the week will be left mostly up to the stock markets. In addition to the factual reports, we will also get the minutes from the last FOMC meeting that can also cause movement in rates. Three of the four reports and the minutes are considered to be moderately or highly important to the bond market and mortgage rates. Therefore, we should expect to see another week of movement in rates.
The bond market will be closed tomorrow in observance of the Columbus Day holiday. The first report of the week comes Tuesday afternoon when the Fed will release the minutes to the last FOMC meeting. These may be a major mover of the markets or could be a non-factor, depending on what they say. The key will be concerns over inflation and the Fed's next move. If the Fed members were concerned about inflationary pressures, we may see the bond market move lower and mortgage rates higher Tuesday afternoon. However, if they indicate a likelihood of another rates cut in the coming months, we should see the bond market rise and mortgage rates drop during afternoon trading.
The first factual economic data of the week will be posted Thursday morning. August's Goods and Services Trade Balance will be released that day, but is not likely to cause much of a change in mortgage pricing. This data is actually the week's least important. It will give us the size of the U.S. trade deficit, but usually does not lead to significant movement in bond prices or mortgage rates.
There are three reports scheduled to be posted Friday. The first is September's Retail Sales report, which is very important to the markets. This data measures consumer spending by tracking sales at retail establishments in the U.S. Since consumer spending makes up two-thirds of the U.S. economy, any related data is considered to be highly important. If we see weaker than expected readings in this report, the bond market should respond favorably and mortgage rates should drop. However, stronger than expected sales could fuel a stock rally and push mortgage rates higher. Current forecasts are calling for a 0.2% increase in sales.
September's Producer Price Index (PPI) is the second report of the day. This index measures inflationary pressures at the producer level of the economy and is considered to be of high importance to the markets. Analysts are expecting to see an increase of 0.4% in the overall index and a 0.2% rise in the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices. A larger than expected increase could fuel more inflation concerns in the bond market and push mortgage rates higher. But, weaker than expected readings should lead to lower rates, especially if the sales report doesn't give us stronger than expected results.
The last report of the week is October's preliminary reading to the University of Michigan Index of Consumer Sentiment late Friday morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. If it shows a sizable decline in consumer confidence, bond prices will probably rise. With the days other two reports being of such importance to the markets, I am not expecting this index to cause much movement in rates. It is expected to show a reading of 84.0, up from September's final of 83.4.
Overall, this is going to be an interesting week for the bond market and mortgage rates. The first part of the week will be left to the stock markets and the Fed minutes. Once we get into the economic data, bond traders will have more factual news to trade on rather than emotion from stock market movements. The most important day of the week is obviously Friday with the Retail Sales and PPI reports, but Tuesday's Fed minutes may also lead to a fair amount of volatility.
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.
Thursday's bond market has opened slightly in positive territory again following the release of weaker than expected manufacturing data. The stock markets are nearly flat with the Dow up 4 points and the Nasdaq up 3 points. The bond market is currently up 5/32, but we will likely still see a slight increase in this morning's mortgage rates due to weakness in bonds late yesterday.
The Commerce Department said late this morning that new orders at U.S. factories fell 3.3% last month. This was a larger drop than was expected and indicates that the manufacturing sector is weaker than many had thought. This is good news for binds and mortgage rates because slowing economic activity eases inflation concerns and makes long-term investments such as mortgage-related bonds more attractive to investors.
Earlier this morning, the Labor Department said that 317,000 new claims for unemployment benefits were filed last week. This was higher than expected, which also can be considered positive news for bonds. However, because it tracks only a week's worth of claims, traders generally don't pay too much attention to its results. This week is especially true with the monthly report coming tomorrow morning.
The Labor Department will also post September's Employment report early tomorrow morning. This report will reveal the U.S. unemployment rate, number of new payrolls added and average hourly earnings. These are considered to be very important readings of the employment sector and can have a huge impact on the financial markets. The ideal scenario for the bond market is rising unemployment, falling payrolls and a drop in earnings.
If we see weaker than expected readings, I expect bond prices to rise and mortgage rates to drop tomorrow morning. But, if the release shows stronger than forecasted readings, particularly in the number of new jobs and average earnings reading, mortgage rates may spike sharply higher tomorrow.
Analysts are expecting to see a slight increase in the unemployment rate to bring it to 4.7%, an increase in new payrolls of approximately 100,000 and a 0.3% increase in earnings. I am concerned that the jobs number may rebound after last month's surprise decline. Accordingly, I am going into the report cautiously and holding lock recommendations for immediate and short-term periods.
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.
Wednesday's bond market has opened slightly in positive territory after the stock markets showed early weakness. The stock markets are posting losses with the Dow down 49 points and the Nasdaq down 12 points. The bond market is currently up 4/32, which with strength later yesterday should improve this morning's mortgage rates by approximately .125 - .250 of a discount point over yesterday's morning rates.
There was no relevant economic news scheduled for today, so look for the stock markets to be the biggest influence in today's bond trading. If we see further weakness in the major stock indexes, we could see funds shift into bonds, especially with stocks at near record levels. This would lead to bond prices rising and mortgage rates to move lower as investors shy away from the volatility in stocks.
The Commerce Department will post August's Factory Orders data late tomorrow morning. This manufacturing sector report is similar to last week's Durable Goods Orders release, but includes orders for non-durable goods. It can usually impact the financial markets enough to change mortgage rates if it varies from forecasts by a wide margin. Current forecasts are calling for a decline in new orders of approximately 2.8%. An unexpected rise could drive mortgage rates higher, while a weaker than expected reading should push them slightly lower tomorrow.
The Labor Department will post September's Employment report early Friday morning. This report will reveal the U.S. unemployment rate, number of new payrolls added and average hourly earnings. These are considered to be very important readings of the employment sector and can have a huge impact on the financial markets. The ideal scenario for the bond market is rising unemployment, falling payrolls and a drop in earnings.
Weaker than expected readings should help boost bond prices and lower mortgage rates Friday. However, stronger then forecasted readings could be disastrous for mortgage pricing. Analysts are expecting to see a slight increase in the unemployment rate to bring it to 4.7%, an increase in new payrolls of approximately 100,000 and a 0.3% increase in earnings.
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.
Tuesday's bond market has opened in positive territory as yesterday's buying seems to be carrying over to today. There was no relevant economic news scheduled for today, but early stock weakness is also contributing to this morning's gains. The stock markets are showing losses with the Dow down 46 points and the Nasdaq down 3 points. The bond market is currently up 8/32, which will likely improve this morning's mortgage rates by approximately .125 of a discount point over yesterday's morning rates.
There is no further important economic news scheduled for release until Thursday morning. Until then, expect the stock markets to heavily influence bond trading. With the major stock indexes on a recent rally, there is some expectation of a pullback. This could lead to shifting of funds back into bonds. However, if the rally seems to continue, bonds may suffer, leading to higher mortgage pricing.
The Commerce Department will post August's Factory Orders data Thursday morning. This manufacturing sector report is similar to last week's Durable Goods Orders release, but includes orders for non-durable goods. It can usually impact the financial markets enough to change mortgage rates if it varies from forecasts by a wide margin. Current forecasts are calling for a decline in new orders of approximately 2.8%. An unexpected rise could drive mortgage rates higher, while a weaker than expected reading should push them lower Thursday.
The Labor Department will post September's Employment report early Friday morning. This report will reveal the U.S. unemployment rate, number of new payrolls added and average hourly earnings. These are considered to be very important readings of the employment sector and can have a huge impact on the financial markets. The ideal scenario for the bond market is rising unemployment, falling payrolls and a drop in earnings.
Weaker than expected readings should help boost bond prices and lower mortgage rates Friday. However, stronger then forecasted readings could be disastrous for mortgage pricing. Analysts are expecting to see a slight increase in the unemployment rate to bring it to 4.7%, an increase in new payrolls of approximately 100,000 and a 0.3% increase in earnings.
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.
Thursday's bond market has opened in positive territory following weaker than expected economic news. None of this morning's data was considered to be highly important, so the reaction has been muted. The stock markets are nearly unchanged with the Dow up 2 points and the Nasdaq up 5 points. The bond market is currently up 7/32, which should push this morning's mortgage rates slightly lower.
The final revision to the 2nd Quarter Gross Domestic Product (GDP) showed that the economy grew at a 3.8% annual pace during the April through June quarter. This was slightly lower than the 3.9% that was expected, but since this data is now aged and the preliminary reading of the 3rd Quarter GDP will be released next month, its results had little impact on bond trading or mortgage rates.
The second release of the day was August's New Home Sales that showed an 8.3% decline in sales. This was a much larger drop than was expected, a 7-year low and indicates that the housing sector is still not at the bottom. This is generally good news for bonds but as with the GDP report, it was not important enough to heavily influence trading or rates.
The Labor Department said that 298,000 new claims for benefits were files last week. This was a sizable difference from the 320,000 that was expected and can be considered negative news for bonds. But since it tracks only a week's worth of claims, it has had a minimal affect on rates.
There are two reports scheduled for release tomorrow morning. August's Personal Income and Outlays and the revised reading to the University of Michigan's Consumer Sentiment Index for September. The first will be released early morning and gives us an indication of consumer ability to spend and current spending habits. This is important to the markets because consumer spending makes up two-thirds of the U.S. economy. Rising income generally indicates that consumers have more money to spend, making economic growth more of a possibility. This is bad news for the bond market and mortgage rates because it raises inflation concerns, making long-term securities such as mortgage related bonds less attractive to investors. It is expected to show a 0.4% rise in income and a 0.4% increase in spending.
The Michigan index measures consumer confidence and is believed to indicate future consumer spending strength. The preliminary release earlier this month revealed an 83.8 reading. Analysts are expecting to see a small upward revision, bringing the index around the 84.0 level. A lower reading should help improve mortgage rates tomorrow morning, depending on the results of the income and spending data.
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.
Wednesday's bond market has opened in negative territory despite weaker than expected economic news. The stock markets are posting sizable gains with the Dow up 80 points and the Nasdaq up 22 points. The bond market is currently down 9/32, which should push this morning's mortgage rates higher by approximately .250 of a discount point.
The Commerce Department said that new orders for big-ticket items fell 4.9% last month. This was a larger drop than was expected, but this data can be quite volatile due to aircraft and transportation related orders. Still, the news is somewhat favorable to bonds and mortgage rates, but today's stock gains have prevented much interest in bonds.
There are two pieces of relevant economic news scheduled for release tomorrow. The first is the final revision to the 2nd Quarter Gross Domestic Product (GDP). Since this data is aged now and the preliminary reading of the 3rd Quarter GDP will be released next month, I don't see this revision having much of an impact on the financial markets or mortgage pricing. It is expected to show a slight decline from the previous estimate of a 4.0% annual rate.
The second is the release of August's New Home Sales. It is expected to show that sales of new homes fell in August. As was the case with Tuesday's Existing Home Sales data, this report will likely not have a significant impact on mortgage rates.
The Labor Department will also give last week's unemployment claim numbers, which are expected to come in at 320,000 new claims. Unless this figure varies greatly from forecasts, it will likely have little impact on tomorrow's mortgage pricing.
Tuesday's bond market has opened in positive territory following a much weaker than expected consumer confidence reading. The stock markets are posting moderate gains again with the Dow up 17 points and the Nasdaq up 5 points. The bond market is currently up 8/32, which will likely improve this morning's mortgage rates by approximately .125 of a discount point.
The Conference Board posted their Consumer Confidence Index (CCI) for September late this morning, showing a reading of 99.8. This was much lower than the 104.5 that was expected and was the lowest reading since November 2005. That indicates that consumers were far less confident in their own financial situations than many had thought. This is good news for the bond market and mortgage rates because waning confidence usually translates into weaker levels of consumer spending.
The National Association of Realtors reported that home resales fell 4.3% last month, which was close to forecasts. This was the sixth consecutive monthly drop in sales, indicating that that the housing sector continues to weaken. However, this data is not considered to be highly important to mortgage bonds, therefore, its results have failed to influence rates this morning.
August's Durable Goods Orders will be posted early tomorrow morning. This report gives us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. Current forecasts call for a drop in orders in the neighborhood of 3.5%. A larger decline could help bond prices and cause mortgage rates to drop tomorrow. However, a smaller than expected decrease would indicate a stronger than expected manufacturing sector that would likely help push mortgage rates higher Wednesday.
This week brings us the release of seven economic reports for the bond market to digest. Three of them are considered to be of low importance and likely will have little impact on mortgage rates. With data scheduled for release each day except tomorrow, we may see an active week in the bond and mortgage markets.
The first important data of the week is Tuesday's Consumer Confidence Index (CCI) for September. This Conference Board index will be posted at 10:00 AM and gives us a measurement of consumer willingness to spend. It is expected to show a decline from last month's reading, indicating that consumers are less likely to make large purchases in the near future. This is good news for the bond market and mortgage rates. Analysts are calling for a reading of approximately 104.5, down from August's 105.0. If we see a larger than expected decline, we should see the bond market move higher and mortgage rates drop Tuesday.
The second piece of data also comes Tuesday morning with the release of August's Existing Home Sales report. The National Association of Realtors posts this data, giving us an indication of housing sector strength by tracking home resales in the U.S. It is expected to show a decline from July's sales, however, this data is not considered to be of high importance to the bond market.
August's Durable Goods Orders will be posted early Wednesday morning. This report gives us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. Current forecasts call for a drop in orders in the neighborhood of 2.5%. A larger decline could help bond prices and cause mortgage rates to drop Wednesday. However, a smaller than expected decrease would indicate a stronger than expected manufacturing sector that would likely help push mortgage rates higher Wednesday.
The first of Thursday's data is the final revision to the 2nd Quarter Gross Domestic Product (GDP). Since this data is aged now and the preliminary reading of the 3rd Quarter GDP will be released next month, I don't see this revision having much of an impact on the financial markets or mortgage pricing. It is expected to show a slight decline from the previous estimate of a 4.0% annual rate.
Also Thursday morning will be the release of August's New Home Sales. It is expected to show that sales of new homes fell in August. As with Tuesday's Existing Home Sales data, this report will likely not have a significant impact on mortgage rates.
There are two reports scheduled for release Friday morning. August's Personal Income and Outlays and the revised reading to the University of Michigan's Consumer Sentiment Index for September. The first will be released early morning and gives us an indication of consumer ability to spend and current spending habits. This is important to the markets because consumer spending makes up two-thirds of the U.S. economy. Rising income generally indicates that consumers have more money to spend, making economic growth more of a possibility. This is bad news for the bond market and mortgage rates because it raises inflation concerns, making long-term securities such as mortgage related bonds less attractive to investors. It is expected to show a 0.4% rise in income and a 0.4% increase in spending.
The Michigan index measures consumer confidence and is believed to indicate future consumer spending strength. The preliminary release earlier this month revealed an 83.8 reading. Analysts are expecting to see a small upward revision, bringing the index around the 84.0 level. A lower reading should help improve mortgage rates Friday morning, depending on the results of the income and spending data.
Overall, this will likely be a fairly active week for mortgage rates. The most important day will either be Tuesday or Wednesday due to the importance of the date being posted those days. For the time being, I am holding the lock recommendations for the immediate, short-term and mid-term periods. If this week's data does indeed show weaker than expected results, I may shift to float across the board. Until we get those assurances, I am concerned that we may see pressure in bonds, possibly leading to higher mortgage rates in the immediate future.
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.
Friday's bond market has opened in positive territory despite stock market gains. The Dow and Nasdaq are showing solid improvements with gains of 80 points and 22 points respectively. The bond market is currently up 3/32, but we still will likely see a sizable increase in this morning's mortgage rates as a result of weakness in bonds late yesterday. I am expecting to see today's rates to be approximately .250 -.375 of a discount point higher than yesterday's morning rates were.
There is no relevant economic data scheduled for release today. It appears that traders are more or less tweaking their portfolios today after the recent volatility in the markets. Unless we see a significant move in bonds from their current levels, we likely will see mortgage rates remain at this morning's levels the rest of the day.
Next week brings us the release of a handful of economic releases, but there is only two that should be considered of high importance to the markets and mortgage rates. But, the week's data does give us a broad spectrum of information, ranging from consumer confidence readings to manufacturing activity to housing strength and consumer spending data. Even though several of the reports are not important individually, collectively as a group they could paint a detailed picture of economic strength or weakness and lead to changes in mortgage rates.
There is no relevant data scheduled for release Monday. The first report is one of the two important ones and it is due out Tuesday morning. Look for more details on it and the rest of the week's events in Sunday's weekly preview.
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