Monday, November 24th
Monday’s bond market has opened in positive territory as market participants anticipate this week’s long-awaited economic data. Stocks are also starting the week with early gains, pushing the Dow up 78 points and the Nasdaq up 394 points. The bond market is currently up 3/32 (4.05%), which should improve this morning’s mortgage rates by approximately .125 of a discount point if compared to Friday’s early pricing.
3/32
Bonds
30 yr - 4.05%
78
Dow
46,323
394
NASDAQ
22,668
Trailing 90 Days - National Average
Medium
Unknown
There is no relevant economic data being released today. The remainder of this holiday-shortened week brings us four monthly reports, in addition to a couple of Treasury Note auctions and a periodic Fed report. Some of those reports were previously delayed by the government shutdown. We are also now getting the regular weekly unemployment update since the shutdown has ended.
High
Unknown
First will be September’s Producer Price Index (PPI) at 8:30 AM ET tomorrow. It will give us some insight into inflationary pressures at the wholesale level of the economy. Analysts are expecting it to show a 0.3% increase in the overall reading and a 0.2% rise in the more important core data that excludes volatile food and energy prices. They are expected to rise slightly on an annual basis. Good news for mortgage rates would be weaker than expected readings that make bonds more attractive to investors and could allow the Fed to make a rate cut next month. Even though this data is aged at this point, a recent announcement that there will be no official October release of this data could offset that reduction in influence.
High
Unknown
September’s delayed Retail Sales data will also be released early tomorrow morning. This report tracks consumer spending that makes up over two-thirds of the U.S. economy. Accordingly, it usually draws plenty of attention in the financial and mortgage markets. Forecasts have sales rising 0.3% from August, indicating consumers spent more in September than the previous month. That would be a sign of economic growth. Bond traders and mortgage shoppers prefer to see a smaller increase in sales that would likely lower rates, assuming the PPI doesn’t show a negative surprise.
Medium
Unknown
November's Consumer Confidence Index (CCI) will be tomorrow’s third release, coming at 10:00 AM ET. This Conference Board index helps us track consumer confidence in their own financial and employment situations. It is thought that they are more apt to make larger purchases in the near future, fueling economic growth, when confidence is rising. This is important because the consumer spending category makes up such a large portion of the economy and strength in it makes long-term securities such as mortgage-related bonds less attractive to investors. Traders are expecting to see a decline from October's 94.6. A decline indicates surveyed consumers felt better about their finances last month than they do the current month. Good news for rates would be a reading below the predicted 93.3.
Medium
Unknown
Also tomorrow is the 5-year Treasury Note auction that will not directly impact mortgage pricing, but can influence general bond market sentiment. If these types of sales go poorly, we often see broader selling in the bond market that leads to upward revisions in mortgage rates. However, strong investor demand usually allows for slight improvements in rates. Results will be announced at 1:00 PM ET, making this an early afternoon event for the mortgage market tomorrow. This scenario will be repeated Wednesday afternoon when 7-year Notes are sold.
Low
Neutral
The U.S. financial markets will be closed Thursday in observance of the Thanksgiving Day holiday. There will not be an early close Wednesday, but the stock and bond markets will close early Friday and will reopen next Monday morning. Friday will likely be a very light day in bond trading as many market participants will be home for the long weekend. The same can be said to some degree Wednesday afternoon also.
---
Unknown
Overall, the most important day for rates is tomorrow with the release of three economic reports, two of which are traditionally considered to be highly important even though they are aged now. The calmest day will probably be Friday since many traders will leave Wednesday afternoon and not be back until Monday morning. We are not expecting as much volatility as last week, but the markets can get active without notice. Therefore, it would be prudent to keep an eye on them if still floating an interest rate.
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... Lock 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.