September 12th, 2008 9:58 AM by Lehel Szucs
Friday's bond market has opened fairly flat despite sizable stock losses during early trading. The stock markets are showing losses as investors worry about the future of Lehman Brothers. There is growing concern that the 158-year old financial institution will fail if not sold or if other drastic measures are not taken very soon. The result is renewed fears about the stability of U.S. banks that has pushed the Dow down 124 points and the Nasdaq down 22 points. The bond market is currently down 2/32, but we will still .likely see a small improvement in this morning's rates as a result of strength late yesterday.
The Commerce Department gave us today's first piece of relevant economic news with the release of August's Retail Sales data. They reported that sales fell 0.3% last month when it was expected to rise by the same amount. This means that consumers were much less active than many had thought. However, this is good news for the bond market and mortgag e rates.
The second of today's three releases was August's Producer Price Index (PPI). It showed a 0.9% drop in the overall reading, meaning that prices paid at the producer level of the economy fell by a wider margin than what was thought. This is good news for the bond market, but the more important core data reading matched forecasts with an increase of 0.2%. Overall, this report can be considered somewhat favorable to bonds and mortgage rates.
The last report of the week was the University of Michigan's Index of Consumer Sentiment late this morning. It indicated that consumers were much more optimistic about their own financial situations than many analysts had expected. The 73.1 reading was much higher than the 64.0 that was expected. This reading is considered bad news for bonds and mortgage rates because consumers tend to spend more when they have more faith in their own financial situation.
Next week is fairly active in terms of e conomic releases with several scheduled that can influence mortgage rates. The first comes Monday morning with the release of August's Industrial Production report. It will be posted mid-morning Monday and is considered to be of moderate importance to the markets. 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... 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.
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