Wednesday, June 17th
Wednesday’s bond market has opened fairly flat despite clearly unfavorable economic data. Stocks are showing early gains, partly due to the same economic headlines. The Dow is currently up 228 points while the Nasdaq is up 68 points. The bond market is currently up 1/32 (4.43%), but gains late yesterday should allow for an improvement of approximately .125 of a discount point in this morning’s mortgage rates.
1/32
Bonds
30 yr - 4.43%
228
Dow
52,228
68
NASDAQ
26,444
Trailing 90 Days - National Average
High
Negative
This morning’s sole relevant economic data was May's Retail Sales report at 8:30 AM ET. It revealed a 0.9% jump in sales while a secondary reading that excludes more costly and volatile auto transactions rose 0.8%. Both readings were well above expectations of up 0.5% and 0.6% respectively. These numbers mean consumers spent much more than anticipated last month. Because consumer spending makes up over two-thirds of the U.S. economy, this data is bad news for bonds and mortgage rates. Fortunately, traders seem to be more focused on this afternoon’s FOMC events than this report, at least for the time being.
High
Unknown
The 2:00 PM ET FOMC meeting adjournment is widely expected to yield no change to key short-term interest rates. Assuming there is no change to key rates, the post-meeting statement could cause some negative volatility if it appears to confirm that there is serious consideration about raising rates before lowering them again. The recently announced Iran peace deal should allow for oil to flow through the Strait of Hormuz, easing gas costs and inflation concerns.
High
Unknown
This FOMC meeting includes revised economic projections such as overall economic growth (GDP), unemployment and inflation predictions. We will also get their so-called dot-plot that tells us where individual Fed members feel key rates will be in the future. They will be followed by a 2:30 PM ET press conference with the newly appointed Chairman Warsh.
Medium
Unknown
Tomorrow has a couple of minor economic releases scheduled, such as the weekly unemployment update and the Conference Board’s Leading Economic Indicators. They will be addressed in this afternoon’s update that will be posted shortly after the markets have an opportunity to react to today’s Fed events.
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... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.