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Friday’s bond market has opened in positive territory due to early stock
weakness and mixed economic news. The major stock indexes are showing early
losses with the Dow down 42 points and the Nasdaq down 10 points,
threatening the Dow’s current winning streak of 10 consecutive sessions.
The bond market is currently up 11/32, which should improve this morning’s
mortgage rates by approximately .125 - .250 of a discount point over
yesterday’s morning pricing. And possibly even more importantly is the fact
that this morning’s gains have pushed the yield on the benchmark 10-year
Treasury Note down to 2.00%, setting us up for a major test of that level.
There were three pieces of relevant economic data posted this morning. The
first came at 8:30 AM ET when the Labor Department announced that the very
important Consumer Price Index (CPI) rose 0.7% last month. That was a
little higher than forecasts, but the core reading that is watched more
closely matched expectations of a 0.2% increase. This means that overall
prices rose more at the consumer level of the economy than many had
thought, however, prices that exclude more volatile food and energy
products showed no surprise. Therefore, we can consider the data
neutral-to-slightly negative for the bond market and mortgage rates.
Today's second report was February's Industrial Production data at 9:15 AM.
It showed a 0.7% increase in output at U.S. factories, mines and utilities.
Since analysts were expecting to see only a 0.4% rise, this data hints at
stronger manufacturer growth, making the data negative for the bond market.
Fortunately, it is not one of the more important manufacturing reports we
see each month and its impact on this morning’s trading has been minimal.
Lastly, we got to see the University of Michigan's Index of Consumer
Sentiment for March late this morning. It was the favorable part of this
morning’s mixed economic data with a reading of 71.8 that was well below
forecasts of 77.6. That indicates surveyed consumers were much less
optimistic about their own financial situations than was predicted. Since
that means consumers are less likely to make a large purchase in the near
future, potentially limiting economic growth, we should consider the data
good news for the bond market and mortgage rates.
Next week brings us the release of a couple economic reports that may
influence mortgage rates, but none of them are considered key releases.
However, there is a two-day FOMC meeting followed by updated economic
forecasts from the Fed and a press conference by Fed Chairman Bernanke the
middle part of the week. There is nothing of relevance scheduled for Monday,
so look for stock movement and weekend news to drive bond trading and
mortgage rates. 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... 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...
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