May 15th, 2010 4:42 PM by Lehel S.
Friday's bond market has opened up sharply following another round of selling in stocks. The stock markets are showing sizable losses with the Dow down 180 points and the Nasdaq down 52 points. The bond market is currently up 17/32, which will likely improve this morning's mortgage rates by approximately .250 - .375 of a discount point.
Due to the stock selling, today's economic data did not influence bond trading and mortgage rates as it was expected to do. The data itself was unfavorable for bonds and rates, but the market seems to be more interested in the stock weakness that has shifted funds away from stocks and into bonds.
The first piece of today's three releases was April's Retail Sales. The Commerce Department said that sales at retail level establishments rose 0.4% last month. This was twice the increase of 0.2% that was expected, meaning consumers spent more than thought. However, if more volatile auto-related sales are excluded, they would have matched forecasts. This has helped prevent the bond market from reacting negatively to the data, but the stock selling has taken center stage anyhow.
The second report of the day was April's Industrial Production. It showed that production at U.S. factories, mines and utilities rose 0.8%. That matched forecasts, meaning that industrial production did not exceed expectations. The sizable gain is good news for the economy and bad news for bonds, but this data is much less important to the markets than the Retail Sales data is. Therefore, it also has had little impact on today's mortgage pricing.
The last report of the week was May's preliminary reading to the University of Michigan's Index of Consumer Sentiment. It showed a reading of 73.3, indicating that consumers were more optimistic about their own financial situations this month than they were last month. Again, as with the earlier two reports, this data has not affected mortgage rates this morning.
Next week brings us the release of a several relevant reports, including two key inflation readings. Nothing of importance is scheduled for release Monday and the most important data will be released mid-week. 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... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Lock 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.