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Tuesday's bond market has opened down sharply, reversing yesterday's major rally that came during late afternoon trading. Today's economic news was weaker than expected, but has failed to stop the selling in bonds and buying in stocks. After closing down 237 points and 55 points respectively yesterday, the Dow and Nasdaq have recovered a good portion of those l osses this morning. The Dow is currently up 168 points while the Nasdaq has gained 36 points. The bond market is currently down 28/32 after closing up 43/32 yesterday. But due to yesterday's rally, I am expecting to see a slight improvement in this morning's rates. However, this will likely be short-lived as bonds continue to slide.
The Conference Board posted November's Consumer Confidence Index (CCI) late this morning. It showed a much weaker than expected reading, indicating that consumers were much less confident about their own financial situations than was thought. The 87.3 reading that we got was well below the 91.5 that was expected and a far cry from the 95.6 of October. This was the fourth consecutive monthly decline and the lowest reading in almost two years. That is very good news for bonds because it tends to mean that consumers are less likely to spend, helping to slow economic activity. That eases inflationary concerns and raises concerns about corporate profits that in turn make bonds more attractive to investors.
October's Durable Goods Orders will be posted early tomorrow morning. This data helps us measure manufacturing strength by tracking orders for big-ticket items. It is expected to show no change in new orders from September's levels. A decline would be good news for the bond market and mortgage rates.
Also scheduled for release tomorrow is October's Existing Home Sales data. This report, along with Thursday's New Home Sales data is the least important of this week's data. They give us a measurement of housing sector strength and mortgage credit demand, but the bond market generally does not rely heavily on their results. Both reports will most likely be ignored due to the importance of other releases scheduled to be posted those days.
The other relevant report Wednesday is the Fed "Beige" Book, which will be released at 2:00 PM ET. The report itself probably will not show many surpri ses. It details economic activity throughout the U.S. by region. Signs of economic weakness should not come as a surprise to the markets and probably will not have had much of an impact on rates. But, the Fed does rely heavily on this data during their FOMC meetings, so any significant surprises could affect afternoon bond trading and possibly lead to changes in mortgage pricing Wednesday afternoon.
Yesterday's late rally in bonds was over exaggerated in my opinion. Today's weakness is really of no surprise considering what went on yesterday. Accordingly, I am shifting to lock recommendations for the short and mid-term periods. Keep in mind though that this does not necessarily mean that I feel rates will rise. It is more like a lake of faith that they will improve much, making the risk of continuing to float not worth the gamble.
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.
Please let me know if I can provide loan information for any of your clients. I would be happy to quickly pre-qualify them, provide loan scenarios, or help improve their credit position to obtain a lower interest rate.
I am here to provide you and your clients with exceptional service in a courteous and respectful manner.
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