May 31st, 2019 9:30 AM by T. Fanning
Last Updated: 5/31/19Friday's bond market has opened in positive territory despite mixed economic news. The stock markets are reacting to the same news as bonds, pushing the Dow lower by 249 points while the Nasdaq has lost 84 points. The bond market is currently up 13/32 (2.17%), which should improve this morning's mortgage rates by approximately .250 of a discount point if comparing to Thursday's morning pricing.April's Personal Income and Outlays data was posted at 8:30 AM ET. The Commerce Department announced a 0.5% rise in income and a 0.3% increase in spending. Bother readings were stronger than forecasts that were calling for 0.3% and 0.2% increases respectively. The readings indicate that consumers had more money to spend and spent more than thought. Because that is a sign of economic growth, we can consider those readings bad news for bonds and mortgage rates. Helping to prevent a negative reaction to the data was the fact the PCE index, which the Fed relies on heavily for gauging inflation. It showed no surprises, meaning the Fed has no reason to raise key short-term interest rates anytime soon.Also posted this morning was the University of Michigan's revised Index of Consumer Sentiment for May. It came in at 100.0, falling short of the 101.5 that was expected. This means surveyed consumers did not feel as good about their own financial situations than many had predicted. Weaker level of confidence usually translates into softer consumer spending numbers, making the reading favorable news for bonds and mortgage pricing.This morning's economic data is not what is fueling today's bond rally or stock selling. It is tariff news that is causing the moves, extending trade war concerns that has recently pushed bond yields to their lowest level since September 2017. President's Trump's announcement of a 5% tariff on imports from Mexico raised more fears of a potential economic slowdown. The result was stock weakness and bond strength across the global markets, to the benefit of mortgage shoppers. If this rally holds, the benchmark 10-year Treasury Note yield could be testing 2.0% in the near future. Since mortgage rates tend to track bond yields, this could mean lower rates also.Next week has plenty of economic data to drive bonds and mortgage rates, but the reports are spread out instead of lumped over just a couple days. There is relevant data set for each day of the week, starting with the highly important ISM manufacturing index Monday and closing with the almighty monthly Employment report Friday. 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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