Friday's bond market has opened in negative territory after this morning's economic news gave us mixed results. The stock markets have reacted favorably with the Dow up 52 and the Nasdaq up 26 points. The bond market is currently down 6/32, but due to strength in bonds late yesterday we will still see an improvement in this morning's mortgage rates of approxi mately .125 of a discount point.
The first of today's three reports was September's Retail Sales data. It showed an increase in sales of 0.6% from August's levels. This was much higher than the 0.2% rise that was expected and indicates that consumers were more active in the month than many had thought. Even if more volatile transportation related sales are excluded, last month's sales exceeded forecasts by 0.1%. This can be considered negative news for bonds and mortgage rates because the stronger level of consumer spending raises economic activity and inflationary concerns.
The second report, but equally important to the bond and mortgage markets was September's Producer Price Index (PPI). It showed an increase in the overall index of 1.1%, which was more than twice what was expected. However, the good news came in the more important core data reading that rose only 0.1% when it was forecasted to rise 0.2%. This means that inflationary pressures at the pr oducer level of the economy were lower than expected if food and energy prices are excluded. This is good news for bonds and mortgage rates.
The last report of the week was October's University of Michigan Index of Consumer Sentiment late this morning. It revealed a reading of 82.0, falling short of the 84.0 that was predicted. This was the least important of the three reports and had little impact on bond trading or mortgage rates this morning.
Next week brings us the release of a few relevant economic reports but one of them is the very important Consumer Price Index (CPI). The first news comes Tuesday morning with the release of September's Industrial Production data. 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 pl ace 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.
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