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July 16th, 2011 3:33 PM
Rate Lock Advisory - Friday Jul. 15th 



Friday’s bond market had opened in negative territory due to stronger than expected inflation news and early stock gains, but has since moved into positive territory. The stock markets initially opened with gains before falling back. They remain mixed at the moment with the Dow down 24 points and the Nasdaq up 10 points. The bond market is currently up 7/32 after earlier being down 6/32. However, we will still likely see an increase of approximately .125 - .250 of a discount point in this morning’s mortgage pricing due to weakness late yesterday.

The Labor Department gave the first of this morning’s three relevant economic reports. They said that the Consumer Price Index (CPI) fell 0.2% last month, but that the core data reading rose 0.3%. The decline in the overall reading was good news because it was a little more than expectations. However, the more important core reading exceeded forecasts, meaning inflation at the consumer level of the economy grew at faster pace than many had thought. This is certainly negative news for the bond market and mortgages. Fortunately for mortgage shoppers, the difference between forecasts and the actual core reading was small.

June's Industrial Production data was released at 9:15 AM ET. This data measures output at U.S. factories, mines and utilities, giving us an indication of manufacturing sector strength. It matched forecasts with a 0.2% increase in production, making it a non-factor in today’s trading and mortgage pricing.

The third release of the morning and the final report of the week did give us a surprise reading. The University of Michigan's Index of Consumer Sentiment was posted late this morning, revealing a reading of 63.8. That was well below forecasts and the lowest reading since March 2009. This means that surveyed consumers were much more pessimistic about their own financial situations than many had expected, making this good news for the bond market and mortgage rates because falling confidence translates into weaker levels of consumer spending. This new was a good a portion of the reason bonds rebounded this morning.

Next week has little scheduled that we need to be concerned with. There are a couple of housing reports due to be posted and moderately important forward predicting index, but not much more. None of the data is scheduled for release Monday. Therefore, expect the stock markets and any weekend news from overseas or our debt ceiling issue to be the biggest influence on bond trading and mortgage rates Monday. Look for more details on next week’s events in Sunday’s weekly preview.

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... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers. 
Posted by Anthony J. Hood on July 16th, 2011 3:33 PMPost a Comment (0)

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