Friday’s bond market has opened in negative territory due to stronger
than expected economic news and more stock gains. The major stock indexes
are showing early strength as we head into the weekend with the Dow up 55
points and the Nasdaq up 17 points. The bond market is currently down
10/32, erasing some of yesterday’s improvements. Yesterday’s gains
actually started to diminish during afternoon trading, maintaining the pattern
of the week. This should translate into an increase of approximately .250
of a discount from yesterday’s morning pricing. If your lender revised
upward late yesterday, then you should see less of an increase in this
morning’s rates.
There were two pieces of economic data posted this morning. The first was
May's preliminary reading to the University of Michigan's Index of
Consumer Sentiment that came in at 83.7. This was much higher than
analysts had predicted and was the highest reading since July 2007. That
means that surveyed consumers were much more optimistic about their own
financial situations this month than many had thought. Since that means
they are more apt to spend money and make large purchases, the data is
negative for the bond market and mortgage rates.
The second report of the morning was April’s Leading Economic Indicators
(LEI) at 10:00 AM ET. It gave us similar results with a larger than
forecasted increase. The Conference Board announced that their LEI rose
0.6% last month when analysts were expecting to see a 0.3% rise. That
indicates that the data is predicting a moderate rate of economic growth
over the next several months, making it favorable for stocks and bad news
for bonds.
Next week brings us a couple of relevant economic reports for the markets
to digest in addition to the minutes from the last FOMC meeting. The
highlight of the week will be Fed Chairman Bernanke’s congressional
testimony on the Fed’s economic outlook that will likely be a market
mover. There is nothing of importance scheduled for Monday, so look for
weekend news and stock movement to drive bond trading and mortgage
pricing until we get to the middle part of the week. Details on next
week’s calendar will be 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... 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...
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