January 29th, 2021 1:03 PM by T. Fanning
Hi, I hope you’re doing well.
Last Updated: 1/29/21
Friday's bond market has opened in negative territory following stronger than expected economic news and despite early stock losses. The Dow is currently down 234 points while the Nasdaq has lost 86 points. The bond market is currently down 10/32 (1.08%), which in addition to weakness late yesterday should cause an increase of approximately .250 of a discount point in this morning's mortgage rates.
December's Personal Income and Outlays data was this morning's first economic release, coming at 8:30 AM ET. It showed a 0.6% rise in income and a 0.2% decline in spending. Both readings were stronger than expected with the income predicted to rise only 0.1% and spending to have fallen 0.4%. The higher level of income means consumers had more money to spend last month, while the smaller decline in spending indicates they spent more than thought even though it was less than in November. Furthermore, an inflation reading within the data that the Fed relies heavily on rose more than analysts were expecting. Because this data allows for stronger economic growth from consumer spending, we need to consider it bad news for bonds and mortgage rates.
Also early this morning was the 4th Quarter Employment Cost Index (ECI) that revealed a 0.7% jump, exceeding forecasts. This index tracks employer costs for wages and benefits, giving us a sign of wage inflation that can spread to other parts of the economy. Since the increase was larger than expected, raising an inflation concern that makes bonds less appealing to investors, this data should also be considered unfavorable for mortgage rates.
The third release of the morning was the revised January reading to the University of Michigan's Index of Consumer Sentiment at 10:00 AM ET. It came in at 79.0, down slightly from December's final reading of 79.2. Forecasts were calling for the same in this month's reading, pointing towards little change in how consumers feel about their own financial situations. This was a small variance and has not had an impact on today's trading or mortgage pricing.
Next week's calendar is much lighter than this week's but includes a couple of highly important economic reports. The week begins and ends with those particularly influential releases. January's ISM manufacturing index will kick off the activities late Monday morning while January's monthly Employment report will end them. In between are also a couple of moderately important reports. Look for details on all of next week's events in Sunday evening's weekly preview.
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...
Float 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 LO NMLS: 208694 | CO License: 100008854 | Company NMLS ID: 479289 Regulated by the Colorado Division of Real Estatewww.nmlsconsumeraccess.org
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