Thursday’s bond market has opened up slightly despite a positive open in stocks and stronger than expected economic data. The Dow is currently up 27 points while the Nasdaq has gained 6 points. The bond market is currently up 4/32, but we will likely see an increase in this morning’s mortgage rates of approximately .250 of a discount point due to weakness late yesterday.
The Labor Department gave us last week‘s unemployment figures this morning, saying that 473,000 new claims for unemployment benefits were filed last week. This was lower than analysts’ expectations, giving hope that the labor market may not be as bad as some had thought. This is bad news for bond and mortgage rates, but has not had much of an impact on this morning’s trading.
Yesterday’s 5-year Treasury Note auction went somewhat well. A couple of the measurements of demand showed strength while others did not. Overall, we can consider the sale average at best. Today’s 10-year Note sale is a little closer to the mortgage market, so if the sale goes well today, we may see strength in bonds during afternoon trading. Results will be posted at 1:00 PM ET.
There are two relevant economic reports scheduled for release tomorrow. The first is the revision to the 2nd Quarter Gross Domestic Product (GDP). The GDP is the total of all goods and services produced in the U.S. and is considered to be the best measurement of economic activity. This reading is the second of three that we see each quarter. Last month’s preliminary reading revealed that the economy grew at an annual rate of 2.4%. Tomorrow’s revision is expected to show that the GDP actually rose only 1.4%. A larger than expected downward revision should help lower mortgage rates, especially if the inflation portion of the release does not get revised higher. There will be a final revision issued next month, but it probably will have little impact on mortgage rates.
August’s revision to the University of Michigan’s Index of Consumer Sentiment is the second report of the day. It helps us track consumer willingness to spend and is expected to show little change from August’s preliminary reading of 69.6. If it revises lower, consumers were less confident about their personal financial situations than previously thought. This would be good news for the bond market and mortgage rates because waning confidence usually means that consumers are less likely to make large purchases in the near future.
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... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...