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Tuesday’s bond market has opened flat even though this morning’s economic
data gave us favorable results. Early stock gains despite that data has
pressured bonds during morning trading. The Dow is currently up 89 points
while the Nasdaq has gained 10 points. The bond market is nearly unchanged,
which should keep this morning’s mortgage rates at yesterday’s levels.
The Commerce Department gave us the first of three economic reports that
were posted this morning. At 8:30 AM ET, they announced that February's
Durable Goods Orders rose 5.7%, exceeding forecasts of a 3.8% increase.
Today’s release also revealed an upward revision to January’s new orders,
indicating that the past two months have been stronger than previously
thought. However, a secondary reading in the report that tracks orders
excluding larger transportation-related products such as airplanes,
actually showed a decline of 0.5% when analysts were expecting only a 0.2%
drop. Therefore, we are considering the data relatively neutral for the
bond market and mortgage rates.
March's Consumer Confidence Index (CCI) was posted by the Conference Board
at 10:00 AM ET this morning. The release revealed a reading of 59.7 that
fell well short of expectations. Analysts were expecting to see a reading
of 66.9 that would have been a small decline from February’s 69.0. This
means that surveyed consumers were much less optimistic about their own
financial situations than many had thought and well below how they felt in
February. That makes the data favorable news for the bond and mortgage
markets because the more concern consumers have about their employment and
finances, the less likely they will be making a large purchase in the near
future. Today’s report was particularly good news because the March decline
erases nearly all of the surprising jump of11 points that we saw from January
to February.
The final report of the morning came also came from the Commerce
Department, who said late this morning that sales of newly constructed
homes fell 4.6% last month. This was a larger decline than forecasts were
calling for, indicating housing sector weakness. That makes the data good
news for the bond market and mortgage rates although this report does not
carry too much significance.
There is nothing in terms of relevant economic data set for release
tomorrow, but we do have the first of this week’s two Treasury auctions
that may influence bond trading enough to affect mortgage rates. That would
be the 5-year Treasury Note auction tomorrow, followed by Wednesday’s
7-year Note sale. Neither of these sales will directly impact mortgage
pricing, but they can influence general bond market sentiment. If the sales
are met with poor levels of investor demand, we could see broader selling
in the bond market that leads to upward revisions to mortgage rates.
However, strong sales usually make bonds more attractive to investors and
bring more funds into the bond market. The buying of bonds that follows
often translates into lower mortgage rates. Results of the sales will be
posted at 1:00 PM ET auction day, so look for any reaction to come during
afternoon hours. The morning hours will likely be driven by movement in
stocks.
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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