April 26th, 2019 2:21 PM by T. Fanning
Last Updated: 4/26/19Friday's bond market has opened in positive territory despite a much stronger than expected headline GDP number. Stocks are in negative territory but were looking to be worse during overnight trading than they are after the data was posted. The Dow is currently down 46 points while the Nasdaq has lost 36 points. The bond market is currently up 10/32 (2.50%), which should improve this morning's mortgage rates by approximately .125 of a discount point if comparing to Thursday's early pricing.The major economic news this morning was the first estimate of the 1st quarter Gross Domestic Product (GDP) at 8:30AM ET. Today's release showed that the economy grew at a surprising rate of 3.2% annually. This was well above forecasts of 1.9% and much higher than the 4th quarter's 2.2%. The headline number indicates the economy was much stronger the first three months of the year than many had thought. By theory, that is really bad news for bonds and mortgage rates. However, the internal inflation data showed that inflation is running much cooler than expected and below the Fed's preferred rate. So, while the headline number looks bad for bonds, the inflation data is quite favorable. Keep in mind that economic growth is not necessarily bad news for long-term securities such as mortgage bonds. It is the factors that usually trend with a strong economy that are detrimental, such as rising inflation. Since today's big report showed much weaker inflation readings, traders can disregard the headline GDP number. That has fueled this morning's bond gains and improvement to mortgage pricing.The second report of the morning was the University of Michigan's revised Index of Consumer Sentiment for April. It came in at 97.2, up a tad from the preliminary reading of 96.9. Analysts were expecting to see a slight decline in this index. The increase means more surveyed consumers felt better about their own financial situations than previously thought. Because strengthening confidence usually leads to stronger levels of consumer spending, we should consider this report to be bad news for bonds. Fortunately, the market is focused on the GDP data this morning, preventing this report from influencing mortgage rates.Next week brings us a bunch of mortgage rate-relevant events, including some highly important economic data and another FOMC meeting. There is something of importance set each day with several days having multiple releases. The week starts with Personal Income and Outlays early Monday morning and concludes with the almighty monthly Employment report Friday morning. In between there is plenty scheduled to drive the financial and mortgage markets. Look for details on all of next week's activities 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...Float 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
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