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If you are considering locking in an interest rate for a New York mortgage or a Florida mortgage, read this post.
Thursday’s bond market has opened flat following a batch of economic news that gave us mixed results. The stock markets are extending yesterday’s rally with the Dow higher by 116 points and the Nasdaq up 33 points. The bond market appears to be unfazed by those gains though, as it is currently almost unchanged from yesterday’s close. This will likely keep this morning’s mortgage rates at yesterday’s levels.
Both of yesterday’s afternoon events failed to give us anything that was a market mover. The Fed’s Beige Book report didn’t reveal any noticeable changes in economic conditions since the last release. And the 10 year Note auction was met with an average to slightly below average demand from investors. Regardless, we didn’t see much of a change in bond prices or mortgage rates late yesterday.
This morning brought us a couple pieces of data that are worth addressing. The first was the highly important Producer Price Index (PPI) for March at 8:30 AM ET. The Labor Department announced that the overall reading was unchanged from February’s reading and that the core data rose 0.3%. The overall reading fell well short of analysts’ forecast of a 0.3% increase (good news for mortgage rates), but the more important core data that excludes volatile food and energy prices rose 0.3% when it was expected to rise only 0.2%. The higher than predicted core reading is negative for bonds and mortgage rates, but it was a slight miss and the other reading was well below forecasts. Therefore, we can consider this report neutral to slightly negative for rates.
The Labor Department also announced that 380,000 new claims for unemployment benefits were filed last week. And as somewhat expected, they again revised the previous week’s number of initial claims higher by 10,000. This is favorable news for the bond market and mortgage pricing because analysts were expecting to see only 355,000 new claims, meaning the employment sector was much weaker than thought the past two weeks. Since it was a sizable variance from forecasts, today’s news has helped keep bond prices unchanged despite the PPI core reading and stock market gains.
February’s Goods and Services Trade Balance was also posted this morning, revealing a trade deficit of $46.0 billion that was well short of the $53.0 billion that was forecasted. However, this data is aged now and doesn’t carry the importance in the markets to directly affect mortgage rates, especially when it falls on a day that other data is released.
Later today, we will see the results of today’s 30 year Bond auction. Yesterday’s 10 year sale doesn’t give us anything to be particularly optimistic about as it indicated an average level of interest in the sale. If today’s sale does go well and there is a higher level of demand for these securities, we could see bond prices improve shortly after the results are posted at 1:00 PM ET.
Tomorrow morning has two more pieces of economic data scheduled with one being the single most important measurement of inflation that we get each month. That would be March's Consumer Price Index (CPI) at 8:30 AM ET. It is quite similar to today's PPI but measures inflationary pressures at the more important consumer level of the economy. If inflation is rapidly rising, bonds become less appealing to investors, leading to bond selling and higher mortgage rates. As with the PPI, there are two readings in the index that traders watch. Analysts are expecting to see a 0.3% increase in the overall readings and a 0.2% rise in the core reading. If we see larger increases, we could see higher mortgage rates.
The final release of the week is the University of Michigan's Index of Consumer Sentiment at 9:55 AM ET tomorrow. Their consumer sentiment index will give us an indication of consumer confidence, which hints at consumers' willingness to spend. If confidence is rising, consumers are more apt to make large purchases. But, if they are growing more concerned about their own personal financial situations, they probably will delay making that large purchase. This influences future consumer spending data and can have a moderate impact on the financial markets. Good news would be a sizable decline from March's 76.2 reading. Current forecasts are calling for a reading of approximately 76.1.
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.
Empire Home Mortgage Inc. is a registered Mortgage Broker with the New York and Florida State Banking Departments and our loans are arranged through third party providers.
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