Monday, July 27th
Monday’s bond market has opened in positive territory following war-related news and somewhat favorable economic data. Stocks are rallying on the geopolitical news, pushing the Dow up 441 points and the Nasdaq higher 96 points. The bond market is currently up 8/32 (4.65%), which should allow for an improvement in this morning’s mortgage rates of approximately .125 of a discount point.
8/32
Bonds
30 yr - 4.65%
441
Dow
51,388
96
NASDAQ
25,072
Trailing 90 Days - National Average
Medium
Positive
This week’s busy economic calendar started with the release of June’s Durable Goods Orders at 8:30 AM ET this morning. It revealed new orders for big-ticket products such as airplanes, appliances and electronics rose 0.3% last month. This was a noticeable rebound from May’s revised 4.0% decline, but fell short of the 1.6% increase that was expected. The large variance from forecasts is not nearly as meaningful in this report as it would be in most other reports that we use because this data is known to be extremely volatile from month to month. A secondary reading that excludes much more costly and volatile airplane-related orders also came in short of forecasts. Accordingly, we are labeling the report slightly favorable for bonds and mortgage rates.
Medium
Positive
Today’s economic data isn’t what is driving bond trading this morning. We are seeing the markets in general react to weekend news that there was a pause in military action between Iran and the U.S. after talks between them supposedly are making progress. We have seen this scenario many times already only to have talks eventually fail. However, the pause in action has oil prices noticeably lower, meaning gas prices and inflation concerns should ease. Since bonds are more attractive to investors when inflation is softening, bond yields and mortgage rates are lower this morning.
High
Unknown
The rest of the week has plenty more scheduled that is likely to affect mortgage rates. There are five more economic reports that are posted monthly or quarterly, including two that are considered to be highly important. In addition to the data, there are also two shorter-term Treasury auctions and an FOMC meeting happening this week. We are also watching for the large number of corporate earnings announcements to possibly influence stocks enough to cause funds to move into or out of bonds, impacting mortgage rates slightly.
Low
Unknown
The referenced Treasury auctions are taking place today and tomorrow when 5-year and 7-year Notes are being sold respectively. Because these are considered mid-term securities, the auction results should have a weaker impact on the broader bond market and mortgage pricing than the long-term sales such as 10-year Notes and 30-year Bonds. Still, an overly strong or weak sale this week could affect bond trading after the results are posted at 1:00 PM ET each day. Favorable news for mortgage rates would be a strong interest in the securities, particularly from international investors.
Medium
Unknown
Next up will be the release of the Conference Board's Consumer Confidence Index (CCI) for July at 10:00 AM ET tomorrow morning. The Conference Board is a New York-based business research group and not a governmental agency, but this report still draws enough attention that it may influence rates. If consumers are more confident in their own financial and employment situations, they are more apt to make large purchases in the near future. This is important because consumer spending makes up over two-thirds of our economy. Good news for mortgage rates would be a weaker than expected reading, meaning consumers were less confident than analysts thought and likely will delay making a sizable personal purchase. Current forecasts show a 92.1 reading, which would be an increase from June's 91.2. The lower the reading, the better the news for mortgage rates.
High
Unknown
Overall, Wednesday is the most important day for rates due to the FOMC meeting, but Thursday's two major reports (PCE inflation indexes and initial GDP reading) could bring a big move in rates that day also. Friday is the best candidate for calmest day. There is no doubt that we will see plenty of movement in the financial markets and mortgage rates this week. Therefore, please keep an eye on them if still floating an interest rate and closing in the near future.
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.