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Friday’s bond market has opened in negative territory following stronger
than expected results in today’s important economic data. The stock markets
are mixed with the Dow up 48 points and the Nasdaq down 2 points. The bond
market is currently down 16/32, which should lead to an increase in this
morning’s mortgage rates of approximately .125 - .250 of a discount point
if comparing to Thursday’s morning pricing.
The Institute for Supply Management (ISM) posted their manufacturing index
for October late this morning, announcing a reading of 56.4. Not only was
that higher than analysts were expecting (55.0), but it also was a small
increase from September’s 56.2. This means that surveyed manufacturing
executives felt business was a little better this month than last month,
surprising many who had thought the government shutdown was going to have a
noticeable impact on sentiment and business conditions. That makes the data
negative for the bond market and mortgage rates, especially since it
somewhat supports the surprise jump in the related Chicago area report
yesterday.
This morning’s news and bond selling has pushed the yield on the benchmark
10-year Treasury Note to 2.60%. If we don’t fall below this threshold
today, the next level of support appears to be around 2.72%. Since mortgage
rates tend to follow bond yields, that would translate into higher rates
for mortgage shoppers. That is still a ways off from the recent high of
2.97%, but a move to that next level raises the possibility of that high
being tested in the near future. A move today or Monday back below 2.60%
would be a favorable signal that more improvements may be coming. However,
in my opinion, the risk of floating versus the potential reward of a lower
rate over the next week or so is titled well into the risk side. Therefore,
I strongly recommend proceeding cautiously if still floating an interest
rate.
Next week doesn’t have a high number of economic reports scheduled for
release but some of the data that is scheduled is considered extremely
important to the financial and mortgage markets. We have the rescheduled
releases of the initial GDP reading for the 3rd Quarter and October’s
Employment report late in the week. Both are considered key reports and are
highly influential on financial markets and mortgage rates. Monday does
have something moderately important for us to watch with the release of
Factory Orders for August and September. 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... Lock if my closing was taking
place between 8 and 20 days... Lock if my closing was taking place between
21 and 60 days... Lock if my closing was taking place over 60 days from
now...
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