Tuesday, August 11th
Tuesday’s bond market has opened in positive territory to recover some of their recent losses. Stocks are fairly calm but split with the Dow up 60 points and the Nasdaq down 7 points. The bond market is currently up 7/32 (4.68%), but weakness late yesterday should keep this morning’s mortgage rates slightly higher than Monday’s early pricing.
7/32
Bonds
30 yr - 4.68%
60
Dow
54,036
7
NASDAQ
26,598
Trailing 90 Days - National Average
Low
Positive
The National Association of Realtors announced late this morning that home resales slipped 0.7% last month. This was close to expectations and signaled more weakness in the housing sector. Year over year sales rose 0.7%, but the markets tend to pay more attention to the monthly change in this data. That said, this is just a moderately important release that showed no big surprises, allowing bond traders to ignore the results this morning.
High
Unknown
Tomorrow begins the release of this week’s highly important economic data. July's Consumer Price Index (CPI) will be posted at 8:30 AM ET tomorrow. The CPI is one of the most important reports for the bond market each month because it tracks inflation at the consumer level of the economy and inflation is such a hot topic at the moment. Forecasts show a 0.1% rise in the overall reading and a 0.2% increase in the more important core data that excludes volatile food and energy prices. Annual readings are expected to decline from June's pace. Good news for mortgage rates would be weaker than predicted readings.
Medium
Unknown
Also tomorrow is the first of this week’s two long-term Treasury auctions that may affect mortgage rates during afternoon trading. 10-year Treasury Notes are being sold tomorrow, followed by 30-year Bonds Thursday with results being posted at 1:00 PM ET each day. They will give us an indication of investor appetite for long-term debt. This is relevant because mortgage rates are based on long-term securities. If demand from investors was strong, particularly from international buyers, we should see mortgage rates improve during afternoon trading tomorrow and/or Thursday. However, a weak interest could lead to broader selling in the bond market that may push mortgage rates higher.
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.