Friday, October 24th
Friday’s bond market has opened up slightly following somewhat favorable news. Stocks are rallying with the Dow up 412 points and the Nasdaq up 267 points. The bond market is currently up 1/32 (3.99%), but weakness late yesterday should push this morning’s mortgage rates higher by approximately .125 of a discount point. If you saw an intraday increase late yesterday, you will likely see no change this morning.
1/32
Bonds
30 yr - 3.99%
412
Dow
47,147
267
NASDAQ
23,209
Trailing 90 Days - National Average
High
Positive
This morning’s major economic release was September’s Consumer Price Index (CPI) that showed inflation at the consumer level of the economy was a bit softer than expected last month. The overall CPI for September rose 0.3% while the more important core data that excludes volatile food and energy costs was up 0.2%. Both were 0.1% lighter than predictions, as were the year-over-year readings. On an annual basis, the overall and core CPI readings stood at a 3.0% pace when they were expected to be at a 3.1% rate. In short, today’s report indicated consumer inflation did increase again last month, albeit not as much as thought. Accordingly, we can label the data slightly favorable for bonds and mortgage rates. That said, the recent rally in bonds leading up to today’s release makes it appear that traders were hoping for even weaker numbers. This could be the reason for a lack of a stronger positive reaction to the news.
Medium
Neutral
Today’s inflation data likely hasn’t altered the Fed’s monetary policy plans. It wasn’t strong enough to cause them to delay their expected cuts to key short-term rates during their next two FOMC meetings, nor did it ease concerns about future inflation that would have allowed the Fed to be more aggressive with their easing cycle. In other words, while the data is having a slight positive influence on this morning’s bond trading and mortgage pricing, it probably had no impact on the Fed’s plans.
Medium
Neutral
Closing out this week’s calendar was the University of Michigan updates Index of Consumer Sentiment at 10:00 AM ET. They announced a reading of 55.0 that was unchanged from the preliminary estimate two weeks ago. Rising confidence usually translates into stronger consumer spending that fuels economic growth. The lack of an upward or downward revision allows us to label the report neutral for mortgage rates.
High
Unknown
Next week had a full calendar of data and other events scheduled, but the government shutdown is going to prevent most of the data from being released. There is one coming from the Conference Board Tuesday that will draw some attention. However, the focus of the week will be the FOMC meeting that will adjourn Wednesday afternoon. Look for details on it and the rest of next week’s calendar in Sunday evening’s weekly preview.
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.