January 12th, 2018 2:27 PM by T. Fanning
Last Updated: 1/12/18Friday's bond market has opened in negative territory following stronger than expect inflation data. The major stock indexes are showing sizable gains with the Dow up 151 points and the Nasdaq up 18 points. The bond market is currently down 9/32 (2.56%), but we should see only a slight increase in this morning's mortgage rates if comparing to yesterday's early pricing. Bond strength Thursday afternoon is preventing more of an upward change in today's rates. However, if your lender did revise rates lower intraday yesterday, you should see an increase in this morning's pricing by the same amount.Yesterday's 30-year Treasury Bond auction was strong, following suit of Wednesday's 10-year Note sale. That led to afternoon improvements in bonds, causing many lenders to improve mortgage rates mid-afternoon. It is that improvement that is softening the impact of this morning's bond losses.There were two pieces of important economic data this morning. In the bad news column was December's Consumer Price Index (CPI) at 8:30 AM. It showed only a 0.1% increase in the overall reading but a larger than expected 0.3% rise in the more important core data. Analysts were expecting to see a 0.2% rise in both. The weaker overall reading is slightly favorable for bonds and mortgage rates. However, the stronger than forecasted core data, which excludes more volatile food and energy prices, showed that inflationary pressures were stronger at the consumer level of the economy than many had thought. Rising inflation makes bonds less attractive to investors and allows the Fed to be more aggressive with their rate hikes.The second piece of data posted this morning was also considered to be important, but it showed no surprise. The Commerce Department announced that retail-level sales rose 0.4% last month, pegging expectations. Even a secondary reading that tracks sales excluding more costly and volatile auto transaction, matched forecasts. The lack of a favorable surprise in this report allows the CPI to be the sole focus of this morning's trading.Next week doesn't have too much scheduled that we need to be concerned with. The calendar includes a few moderately important economic releases and the Fed Beige Book release. The financial and mortgage markets will be closed Monday in observance of the Martin Luther King Day holiday and will reopen for regular trading Tuesday. There is no early close in the bond market today. 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...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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