December 21st, 2018 11:26 AM by T. Fanning
Last Updated: 12/21/18Friday's bond market has opened in positive territory despite early gains in stocks and mixed economic news. The major stock indexes appear to be heading into the holiday weekend with sizable gains, although we have seen a couple of reversals this week. At the moment the Dow is up 288 points while the Nasdaq has gained 20 points. The bond market is currently up 2/32 (2.80%), but weakness late yesterday should push this morning's mortgage rates higher by approximately .125 of a discount point if comparing to Thursday's morning pricing. Some lenders revised rates slightly higher during afternoon trading yesterday. If your lender did make such a move, you may not see a change in this morning's rates.November's Durable Goods Orders started this morning's economic releases at 8:30 AM ET. The Commerce Department announced a 0.8% rise in new orders for big-tickets products such as appliances and airplanes. This was softer than the 1.7% increase that was expected, although the variance isn't as significant as it would be in other reports due to the volatility in this data. However, a secondary reading that excludes more costly and volatile transportation-related orders (airplanes) revealed a 0.3% decline compared to the 0.3% increase that analysts were expecting. Both readings are good news for bonds and mortgage rates with the more influential being the ex-transportation reading.Also at 8:30 AM ET was the release of the 2nd revision to the 3rd Quarter Gross Domestic Product (GDP). It came in with a 3.4% annual rate of growth during the quarter, down slightly from the previous estimate of 3.5%. That would be good news for mortgage rates because it also shows weaker than expected economic activity, but the age of the data has prevented much of a reaction. The markets are more concerned about the current quarter's number that will be posted next month.November's Personal Income and Outlays data was next, showing a 0.2% rise in personal income and a 0.4% increase in spending. The good news is the income reading was slightly lower than expectations (0.3%), indicating consumers had less money to spend than thought. However, spending rose 0.1% more than predicted. Since consumer spending makes up such a large part of our economy, that reading should be considered bad news. The mixed results limited any influence on this morning's mortgage pricing.The final report of the week was the revised University of Michigan Index of Consumer Sentiment for December at 10:00 AM ET. This index showed a 98.3 reading that exceeded expectations and was an increase from the previous 97.5. The increase means more surveyed consumers felt better about their own financial situations than previously did. Because rising sentiment usually means consumers are more likely to make a large purchase in the near future, the unexpected increase is bad news for the bond market and mortgage rates.In the news also is the deadline of midnight tonight for congress and President Trump to have a spending bill in place to keep parts of the government open. This would not be a full shutdown because some agencies are already funded through the fiscal year that ends next September. There seemed to be hope that a temporary bill would pass that would keep the doors open until February, but that quickly went away yesterday. I don't think we will see this topic have much of an impact on mortgage rates today though. For starters, it would affect only parts of the government. Also, the deadline comes at midnight of a Friday right before the holidays, so not much was expected to happen until Wednesday of next week. It is difficult to predict what will happen in Washington DC, but I would be surprised if we see the bond and mortgage markets make a big move today because of the potential shutdown.Next week is pretty light in terms of relevant economic data and other events that are scheduled. There are a couple of economic reports set for release and two Treasury auctions, but none are considered major events. The stock and bond markets will close early Monday and remain closed Tuesday for the Christmas Day holiday. We should see very light trading Monday as most traders will be home for the holiday, leaving skeleton crews working. Look for details on next week's events 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...Lock 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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