Friday’s bond market has opened relatively flat following mixed inflation news. Early stock losses are helping to keep bonds from moving into negative ground, at least for now. The Dow is down 170 points while the Nasdaq has lost 397 points. The bond market is currently down 1/32 (5.13%), but weakness late yesterday is going to cause an increase of approximately .250 of a discount point in this morning’s mortgage rates. If you saw an intraday increase yesterday afternoon as bonds extended morning losses, you may see no change this morning. 1/32 Bonds 30 yr - 5.13$ 170 Dow 52,126 397 NASDAQ 24,968
Indexes Affecting Rate Lock MediumNegativeTreasury Auctions (5,7,10,20,30 year)Yesterday’s 30-year Treasury Bond auction followed suit of Tuesday’s 10-year Note sale by drawing a somewhat lackluster demand from investors. The benchmarks we use indicated a below-average interest in the securities compared to other recent sales. This means investor appetite for long-term securities is waning at the moment. That isn’t necessarily a surprise considering the current inflation concerns, but it is bad news for mortgage rates because they are based on long-term debt also. However, the auction had little to do with yesterday’s bond meltdown as they were well off their morning levels long before the results were posted at 1:00 PM ET. HighNeutralProducer Price Index (PPI)October's Producer Price Index (PPI) that was released at 8:30 AM ET this morning gave us some insight into inflationary pressures at the wholesale level of the economy. The data provided mixed feedback on the subject with the overall PPI reading coming in at up 0.3% when it was expected to be up 0.4%. On the other hand, the core data that excludes more volatile food and energy costs pegged forecasts of a 0.3% rise last month. We are labeling the report neutral for mortgage because even though the overall reading was a tad below expectations, core data showed no surprises and the year-over-year numbers of up 6.5% and 5.0% respectively are still significantly higher than the Fed’s goal rate and don’t appear to be coming down. Yes, these are wholesale inflation numbers and not consumer prices, but wholesale price increases usually trickle down to the consumer level eventually. HighUnknownRetail SalesNext week has a handful of relevant events scheduled, including one major economic report (October’s Retail Sales data Tuesday) and the minutes from last month’s FOMC meeting. The week starts light with nothing of importance scheduled for Monday. If there is a noticeable move in rates Monday it will likely come from weekend headlines, particularly Iran-related that causes an upward or down change in oil prices. Look for details on all of next week’s calendar in Sunday evening’s weekly preview.
Float / Lock Recommendation 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.
