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Friday’s bond market initially opened in positive territory following the
release of favorable economic news but has since turned south following
late morning data. The stock markets have not having nearly the reaction to
the data that bonds are having. The Dow and Nasdaq are both down a couple
of points. The bond market is currently down 12/32, which will likely push
this morning’s mortgage rates higher by .250 - .375 of a discount point
over yesterday’s morning pricing.
Yesterday’s 7-year Treasury Note auction actually went pretty well with
several indicators that we use pointing towards a decent level of investor
interest. That helped boost bond prices during afternoon trading yesterday
and led to some lenders improving rates. Unfortunately, that improvement
was erased with this morning’s bond selling.
The Commerce Department gave us April's Personal Income and Outlays data
early this morning with an announcement of a 0.1% increase in income and a
0.2% decline in spending. Both readings were weaker than what analysts were
expecting to see (0.1% rise in both). That indicates that consumers had a
little less money to spend than thought and actually spent less than they
did in March. These readings point towards slower economic activity, making
them good news for the bond market and mortgage rates.
Late this morning, the University of Michigan revised their Index of
Consumer Sentiment for May. It showed a reading of 85.5 that exceeded
forecasts of 83.7. This was the highest reading since July 2007 and
indicates that consumers were more optimistic about their own financial
situations than analysts expected. Since that usually means consumers are
more willing to spend, we consider this bad news for the bond market and
mortgage rates.
Next week has come very important economic data scheduled. There are
reports that are relevant to the bond market and mortgage rates scheduled
four of the five days, including Monday’s ISM manufacturing index. It will
be posted late Monday morning and is one of the more important reports we
get each month. The week closes with the almighty Employment report next
Friday. Look for details on all of 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... 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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