July 30th, 2018 10:31 PM by T. Fanning
Last Updated: 7/27/18Friday's bond market has opened in positive territory despite a strong economic number in today's key economic data. The major stock indexes are mixed with the Dow up 17 points and the Nasdaq down by the same number. The bond market is currently up 7/32 (2.95%), but weakness late yesterday should cause a slight increase in mortgage rates this morning. It wasn't enough of a move to cause widespread revisions to rates Thursday afternoon, leaving this morning's pricing to reflect that loss.Yesterday's 7-year Treasury Note auction went pretty well also, following Wednesday's 5-year Note sale. Investor demand was not strong enough for the bond and mortgage markets to make a noticeable move, making the event a non-factor in terms of mortgage rate influence.Today's big news was the preliminary reading of the 2nd Quarter Gross Domestic Product (GDP) at 8:30 AM ET. It showed that the U.S. economy grew at an annual pace of 4.1%, matching forecasts. The first quarter growth rate was revised from up 2.0% to 2.2% also. While the 4.1% is a solid rate of growth that is detrimental to bonds, it pegged expectations. Therefore, we are not seeing a significant reaction to the headline number. What we are seeing a slight positive reaction to this morning is a secondary reading within the report that indicates inflation was a bit softer than expected.Also posted this morning was the revised University of Michigan Index of Consumer Sentiment for July. They announced a reading of 97.9, which was up from the previous estimate of 97.1. Analysts were expecting to see no change, so the increase means surveyed consumers were more optimistic about their own financial situations than many had thought. That is bad news for bonds and mortgage rates because rising sentiment usually translates into stronger levels of consumer spending that fuels economic growth. That said, the markets are focused on the GDP release and have had no reaction to this report.Next week looks to be a very active week for the financial and mortgage markets with a good-sized batch of economic releases that include the ISM index and the almighty monthly Employment report. In addition to the data, we also have an FOMC meeting taking place. Each day has something of relevance scheduled except for Monday. 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...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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