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Friday’s bond market has opened up slightly with stocks showing
noticeable losses. The major stock indexes are well in negative territory
during early trading. The Dow is currently down 94 points while the
Nasdaq has lost 10 points. The bond market is currently up 3/32, but
afternoon strength yesterday should improve this morning’s mortgage rates
by approximately .125 - .250 of a discount point.
Yesterday’s 7-year Treasury Note auction went a little better than
Wednesday’s 5-year Note sale. That news didn’t cause bonds to rally late
yesterday, but it did contribute to them erasing their morning losses and
moving into positive ground before closing. The rebound from yesterday
and this morning’s gains have pushed the yield on the benchmark 10-year
Treasury Note down to 2.56%. Unfortunately, as long as it is above 2.50%
it is my opinion that the risk of mortgage rates moving upward still
remains high. Therefore, please proceed cautiously if still floating an
interest rate and closing in the near future.
There was one piece of economic data posted late this morning. The
University of Michigan revised their Index of Consumer Sentiment for July
just before 10:00 AM ET. They announced a reading of 85.1 that was its
highest level in six years, indicating that surveyed consumers were more
optimistic about their own financial situations than many had expected.
Analysts were calling for a reading of 84.1, which was a slight increase
from the preliminary estimate of 83.9 announced earlier this month.
Because rising confidence in consumers usually means they are more apt to
make a large purchase in the near future that fuels economic growth, we
should consider this data negative for the bond market and mortgage
rates. However, as expected, the news hasn’t had much of an influence on
this morning’s trading or mortgage pricing.
Next week is extremely busy in terms of important economic data and other
events that are likely to affect bond trading and mortgage rates. I show
seven economic reports currently scheduled to be posted next week,
including the initial Gross Domestic Product (GDP) reading for the second
quarter, ISM manufacturing index and the monthly Employment report. In
addition, we also have another FOMC meeting that will probably cause more
volatility in the markets. The mortgage relevant events don’t start until
Tuesday morning, so expect any weekend news and last minute portfolio
adjustments ahead of the week’s calendar to drive bond trading and
mortgage pricing Monday. Look for details on next week’s events in
Sunday’s weekly preview.
Tomorrow’s only relevant economic data is the revised reading to July's
University of Michigan Index of Consumer Sentiment just before 10:00 AM
ET. This index will help us measure consumer optimism about their own
financial situations and is considered relevant because rising consumer
confidence usually translates into higher levels of spending, which adds
fuel to the economic recovery and is looked at as bad news for bonds.
Tomorrow’s release is an update to the preliminary reading we saw two
weeks ago, so unless we see a drastic revision to the preliminary
estimate of 83.9, I think the markets will probably shrug this news off.
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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