April 15th, 2010 12:22 PM by Lehel S.
Thursday's bond market has opened down slightly despite weaker than expected economic data and a negative open for stocks. The stock indexes are showing relatively minor losses with the Dow down 25 points and the Nasdaq down 1 point. The bond market is currently down 3/32, which will likely push this morning's mortgage rates approximately .125 - .250 of a discount point higher.
We saw some movement in the markets yesterday after the Fed Beige Book was released. It showed that 11 of the 12 Federal Reserve districts showed slight economic expansion. The growth in activity was minor and there were few signs of inflation becoming a threat. The report's contents did not come as a surprise and did little to influence theories of when the Fed may start raising key interest rates. The stock markets closed at higher levels than before its release while the bond market fluctuated during afternoon trading.
March's Industrial Production report was posted t his morning, giving us a measurement of manufacturing strength. It revealed a 0.1% increase in industrial output that was well below forecasts. Analysts were expecting to see a 0.7% rise in production, meaning manufacturing activity was not as strong as thought. That is considered good news for the bond market and mortgage rates.
Also posted this morning were last week's unemployment figures from the Labor Department. They announced that 484,000 new claims for unemployment benefits were filed last week. This was much higher than the 440,000 that was expected, indicating that the employment sector is getting weaker rather than strengthening. That bodes well for the bond market is the pattern continues.
There are two reports scheduled for release tomorrow that are somewhat relevant to mortgage pricing. March's Housing Starts is first, but it the least important of the two. It gives us a measurement of housing sector strength and mortgage credit deman d, however, usually doesn't cause much movement in mortgage pricing unless it varies greatly from forecasts. It is expected to show an increase in construction starts of new homes.
The final release of the week is the University of Michigan's Index of Consumer Sentiment at 9:45 AM ET tomorrow. Their consumer sentiment index will give us an indication of consumer confidence, which hints at consumers' willingness to spend. If confidence is rising, consumers are more apt to make large purchases. But, if they are growing more concerned of their personal financial situations, they probably will delay making that large purchase. This influences future consumer spending data and can have a moderate impact on the financial markets. Good news would be a decline from March's 73.6 reading. Current forecasts are calling for a reading of approximately 75.0.
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.