Tuesday’s bond market has opened in negative territory following stronger than expected economic news. Stocks are showing early gains with the Dow up 101 points and the Nasdaq up 126 points. The bond market is currently down 2/32 (1.63%), but strength late yesterday should still allow an improvement in this morning’s mortgage rates of approximately .125 of a discount point. If you saw an intraday improvement yesterday, you may see a slight increase in this morning’s pricing. 2/32 Bonds 30 yr - 1.63% 101 Dow 35,842 126 NASDAQ 15,353
Indexes Affecting Rate Lock MediumNegativeConsumer Confidence Index (Conference Board)October's Consumer Confidence Index (CCI) came in at 113.8, up from September’s revised 109.8 and higher than forecasts. The increase means surveyed consumers felt better about their own financial situations this month than they did last month. That is bad news for bonds and mortgage rates because rising confidence usually translates into stronger levels of consumer spending that fuels economic growth. LowNegativeNew Home SalesAlso released late this morning was September's New Home Sales data that showed sales of newly constructed homes jumped 14.0% last month. The number of sales was much higher than thought, but the spike in percentage is partly due to a downward revision to August’s sales figures. Fortunately, this is considered to be of low importance to the markets since it tracks such a small percentage of all home sales. HighUnknownDurable Goods OrdersTomorrow has a morning and afternoon event that we will be watching. First will be September’s Durable Goods Orders at 8:30 AM ET. It gives us an important measurement of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items, or products that are expected to last three or more years. Analysts are currently calling for a 0.8% decline in new orders for products such as airplanes, appliances and electronics. If we see an increase in orders, mortgage rates will probably rise as bond prices fall. On the other hand, a larger decline should be good news for the bond market and mortgage rates. This data can be quite volatile from month to month and is difficult to forecast. Therefore, a small variance in orders either way, likely will have little effect on tomorrow’s bond trading or mortgage pricing. MediumUnknownTreasury Auctions (5,7,10,20,30 year)Next up will be the first of the week's two Treasury auctions that have the potential to influence mortgage rates. 5-year Notes will be sold tomorrow followed by 7-year Notes Thursday. If these sales are met with a strong demand from investors, particularly tomorrow’s auction, bond prices may rise during afternoon trading. This could lead to improvements in mortgage rates shortly after the results of the sales are posted at 1:00 PM ET each day. A lackluster investor interest may create selling in the broader bond market and lead to slight upward revisions to mortgage rates.
Float / Lock Recommendation 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.