September 14th, 2018 1:02 PM by T. Fanning
Last Updated: 9/14/18Friday's bond market has opened in negative territory following mixed results in today's economic data. The major stock indexes are flat for the most part with the Dow up 1 point and the Nasdaq up 12 points. The bond market is currently down 6/32 (2.99%), which should push this morning's mortgage rates higher by slightly less than .125 of a discount point over Thursday's morning pricing.Yesterday's 30-year Treasury Bond auction went fairly well but demand was not as strong as what Wednesday's 10-year Note auction drew. It was not strong enough to cause much of a reaction in the bond market. Accordingly, the sale had no impact on yesterday's afternoon mortgage pricing.August's Retail Sales report was posted at 8:30 AM ET this morning as the first of today's three economic releases. The Commerce Department announced a 0.1% increase in retail-level sales, falling short of expectations. Forecasts were calling for a 0.4% rise in sales. Even a secondary reading that excludes more costly and volatile auto sales transactions came in lighter than expected. This indicates that consumers spent less last month than many had thought. Because consumer spending makes up over two-thirds of our economy and bonds tend to thrive in weaker economic conditions, today's report can be considered favorable news for mortgage rates.The second release of the morning came at 9:15 AM ET when August's Industrial Production report was posted. This report gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It showed a 0.4% rise in output, matching predictions. The increase in production is technically not good news for bonds and mortgage rates, but because it showed no surprise we can consider it neutral for rates.The final release of the week was the University of Michigan's Index of Consumer Sentiment at 10:00 AM ET. They announced a surprising reading of 100.8, greatly exceeding forecasts of 97.0 and up from August's 96.2. The spike means surveyed consumers were much more optimistic about their own financial and employment situations than nearly everyone had thought. That is bad news for bonds and mortgage rates because rising confidence usually translates into stronger levels of consumers spending that fuels economic growth.This morning's move in bonds is concerning yet also brought some relief, at least temporarily. Overnight weakness carried into this morning's trading, pushing the benchmark 10-year Treasury Note yield to 3.00%. That is the concerning part because a sustained break above it could lead to a noticeable upward trend in mortgage rates. The relief came in the fact that when it reached 3.00%, buyers came in to support it, pushing the yield back down to 2.99%. That in itself shows there's still strong resistance at 3.00%. As we have seen the last several times this level has been tested, this could be just the high end of the range being tested before moving lower. Since mortgage rates tend to track bond yields, the translation is that if we stayed below 3.00% we should see some improvements to mortgage rates in the near future.Next week has little economic data or other scheduled events that are expected to affect mortgage rates other than a couple of housing-related reports. Monday has nothing scheduled that we need to be concerned with, so look for weekend news to have the biggest impact on mortgage rates. 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...Float 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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