Daily mortgage report

Greetings! Here's your Daily Commentary report compliments of Alan Russell & Princeton Capital! Call me today for current rates and market information at (650) 947-2296.           Tuesday’s bond market has opened in negative territory even though stocks are showing losses. The Dow is currently down 67 points while the Nasdaq has lost 18 points. The bond market is currently down 19/32, which should push this morning’s mortgage rates higher by approximately .375 of a discount point over yesterday’s morning pricing. The Commerce Department gave us today’s only relevant economic data with the release of July's Retail Sales numbers at 8:30 AM ET. They announced that retail-level sales rose 0.2% last month as expected. However, a secondary reading that tracks consumer spending excluding more volatile and pricey auto sale transactions rose 0.5% when analysts were calling for a 0.3% rise. In addition, a 0.2% upward revision to June’s sales is also pressuring bonds during early trading. The headline number would be neutral for the bond market and mortgage rates since it shows consumer spending rose modestly and at a pace that was not a surprise. The bad news for the mortgage market is the ex-auto number and the upward revision to June’s sales that indicates spending rose fairly rapidly during the month. It is not really a surprise to see the bond market react negatively to this data as it the report that was expected to carry the most influence on trading and mortgage pricing unless the CPI later in the week shows a significant variance from forecasts. There also appears to have been a swing into a negative tone in bonds late yesterday as the morning’s gains were erased by closing, causing many lenders to revise pricing upward. Nothing of significance stands out as the reasons for it, which actually makes it a bit concerning. This morning’s economic news isn’t terribly strong, but the turn into negative ground during afternoon trading yesterday seems to be carrying into this morning’s session, boosted slightly by the data. It will be interesting to see if bonds extend their losses as the day progresses or if they remain near current levels. Tomorrow also has important economic data for the markets to digest. July's Producer Price Index (PPI) at 8:30 AM ET is one of the week’s two key inflation readings, giving us an indication of inflationary pressures at the producer level of the economy. There are two readings in the report- the overall index and the core data reading. The core data is more important because it excludes more volatile food and energy prices that can change significantly from month to month. Current forecasts call for a 0.3% rise in the overall reading and a 0.2% increase in the core data. A larger increase in the core data could push mortgage rates higher tomorrow morning. If it reveals weaker than expected readings, we may see bond prices rise and mortgage rates improve as a result. 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... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...       Alan Russell 161 South San Antonio Rd. | Los Altos, CA 95022 Ph: 650-947-2296 | Fax: 408-335-1118 alanrussell@princetoncap.com CLICK HERE TO STOP RECEIVING OUR REPORT