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Friday’s bond market has opened in positive territory again following the
release of favorable economic news. The stock markets are showing early
losses with the Dow down 47 points and the Nasdaq down 18 points. The
bond market is currently up 14/32, which should improve this morning’s
mortgage rates by approximately .250 of a discount point.
Today’s economic releases were started by the Labor Department, who
posted their Producer Price Index (PPI) readings for March at 8:30 AM ET.
They announced that the overall PPI reading fell a larger than expected
0.6% and that the core reading rose 0.2%. The drop in the overall reading
is good news for the bond market, but the core data exceeding forecasts
of a 0.1% increase. The core data is the more important of the two
because it excludes more volatile food and energy prices. Still, the size
of the decline in the overall reading and the small miss in the core data
allows us to consider this news favorable for the bond market and
mortgage rates.
The Commerce Department gave us today’s second release with March's
Retail Sales data that was also posted early this morning. It revealed a
0.4% decline in retail-level sales, falling short of the no change that
was expected. Since consumer spending makes up over two-thirds of our
economy, the decline hints that economic growth will likely be subdued in
the near future. That clearly makes the data good news for the bond
market and mortgage pricing.
The final release of the week was the University of Michigan's Index of
Consumer Sentiment late this morning that showed a reading of 72.3 that
was well below forecasts of 78.0. This means that surveyed consumers were
much less optimistic about their own financial situations than many had
thought. Since that hints that consumer spending may be weaker than
previously thought in the near future, we can also consider this data as good
news for mortgage rates.
Next week is fairly light in terms of relevant economic reports scheduled
for release. There are a couple reports that are worth watching,
including the Consumer Price Index (CPI) that is the sister report to
today’s PPI and is considered a key inflation gauge. None of them are set
for release Monday, so look for any weekend news (N. Korea, Eurozone
financial and economic, etc) and stock gains or losses to be the biggest
influence on bond trading and mortgage rates until we get to Tuesday’s
events. Look for details on next week’s calendar 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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