January 15th, 2010 10:01 AM by Lehel S.
Friday's bond market has opened in positive territory following early stock weakness. The stock markets are showing losses despite stronger than expected earnings results from giants Intel and JPMorgan Chase. The Dow is currently down nearly 100 points while the Nasdaq has fallen 24 points. This has made bonds more attractive to investors as a safe-haven. The end result is the bond market up 15/32, which should improve this morning's mortgage rates by approximately .250 of a discount point over yesterday's morning pricing.
The Labor Department reported early this morning that December's Consumer Price Index (CPI) rose 0.1% and that the more important core data reading increased 0.1%. The core data matched forecasts but the overall reading was slightly lower than expectations. The news is somewhat positive for bonds because it means inflationary pressures remained subdued at the consumer level of the economy. But since it nearly matched expectations, its im pact on this morning's mortgage rates has been fairly minimal.
December's Industrial Production report was the second report of the morning. It revealed a 0.6% increase in out at U.S. factories, mines and utilities. That matched forecasts, indicating moderate growth in the manufacturing sector. But since it did not surprise traders, it had no influence on this morning's trading or mortgage rates.
The third and final report of the day was the University of Michigan's Index of Consumer Sentiment for December. It came in at 72.8, falling short of the 73.8 that was expected. This means that consumers were less optimistic about their own financial situations than many had thought. That can be considered favorable news for the bond market because waning confidence usually translates into less consumer spending and weaker economic activity.
Next week is pretty light in terms of the number of economic reports scheduled for release. There is onl y one important report scheduled and it comes the middle part of the week. The markets will be closed Monday in observance of the Martin Luther King Jr. holiday, but there will not be an early close this afternoon. Look for more details on next week's events in Sunday's weekly preview.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float 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.