May 15th, 2008 2:00 PM by Lehel Szucs
Thursday's bond market has opened in positive territory after this morning's economic data showed much weaker manufacturing activity than was expected. The stock markets are showing modest gains with the Dow up 9 points and the Nasdaq up 7 points. The bond market is currently up 5/32, which should keep this morning's mortgage rates near yesterday's levels.
April's Industrial Production report was released this morning, revealing a surprising 0.7% decline in output. It was expected to show that production at U.S. factories, mines and utilities fell 0.3%. This is good news for bonds and mortgage rates because slowing manufacturing activity is an indication of a weakening economy.
The Labor Department gave us last week's unemployment figures, saying that 371,000 new claims for benefits were filed. Since this data tracks only a week's worth of claims and it nearly matched forecasts, this data had little impact on bond trading or mortgage rates today .
There are two pieces of data due to be posted tomorrow. April's Housing Starts is the first and is the least important of the two. This data measures housing sector strength and mortgage credit demand by tracking new permits and actual starts of new home construction. It is expected to show a decline in new starts from March's readings. But, since this report is not considered to be of high importance to the bond market, it likely will have little impact on mortgage rates unless it varies greatly from forecasts.
The last report of the week is May's preliminary reading to the University of Michigan's Index of Consumer Sentiment late tomorrow morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. It is expected to show a reading of 62.0, which would be a small decline from last month's final reading. If it shows a decline in consumer confidence, bond prices will likely rise. This should le ad to mortgage rates moving slightly lower tomorrow.
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.
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