January 13th, 2017 10:17 AM by T. Fanning
Last Updated: 1/13/17Friday's bond market has opened well in negative territory despite mixed economic news and a fairly calm open in stocks. The Dow is currently up 36 points while the Nasdaq has gained 25 points. The bond market is currently down 17/32 (2.42%), which should push this morning's mortgage rates higher by approximately .375 - .500 of a discount point if comparing to Thursday morning's pricing.Yesterday's 30-year Treasury Bond auction did not go badly but was not nearly as strong as Wednesday's 10-year Note sale. Bonds did up some of their earlier gains during afternoon trading yesterday, causing some lenders to issue slight upward revisions to rates before the end of the day. However, I don't believe the auction was necessarily the cause of it.This morning brought us a couple of very important pieces of economic data. The Commerce Department announced at 8:30 AM ET that retail-level sales rose 0.6% last month, falling just short of the 0.6% that was expected. The smaller increase is technically good news, but it was still a noticeable gain in consumer spending. What can be looked at as favorable was a secondary reading that excludes more volatile and costly auto transactions. This reading showed a 0.2% rise when analysts were expecting to see 0.6%. That tilts the results to positive for mortgage rates.Also at 8:30 AM ET was December's Producer Price Index (PPI). It revealed a 0.3% increase in the overall reading and a 0.2% rise in the more important core data that does not include food and energy costs. The overall reading pegged forecasts while the core reading came in slightly higher than the 0.1% that was expected. This means that core inflationary pressures were a tad stronger at the manufacturing level of the economy than many had thought. Because any sign of inflation rising is generally bad news for bonds, we should consider this report slightly negative for mortgage rates.Late this morning, the University of Michigan posted their initial Index of Consumer Sentiment reading for January. It stood at 98.1, falling short of the 98.5 that was expected and December's 98.2. That means that surveyed consumers were just as confident in their personal financial and employment situations than they were last month. Since market participants were expecting to see a little higher reading, we can consider the data slightly favorable for bonds and mortgage pricing.Next week has only a few reports scheduled for release and it appears that only one is of high importance. The financial markets are closed Monday in observance of the Martin Luther King Jr. holiday, so many mortgage lenders will likely follow suit. Those who are open for business will use this afternoon rates or won't accept rate locks until Tuesday morning. Due to the holiday, our weekly preview will likely be posted Monday instead of the traditional Sunday evening.If I were considering financing/refinancing a home, I would....Lock if my closing were taking place within 7 days...Lock if my closing were taking place between 8 and 20 days...Lock if my closing were taking place between 21 and 60 days...Float if my closing were taking place over 60 days from now...This is only my opinion of what I would do if I was financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.**http://www.hlmcolorado.com/DailyRateAdvisory
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