Rate Lock Advisory Wednesday, September 30th Wednesday’s bond market has opened in negative territory again following mixed economic data. Stocks are showing early gains with the Dow up 70 points and the Nasdaq up 265 points. The bond market is currently down 4/32 (5.26%), but gains late yesterday should allow for an improvement in this morning’s mortgage rates of approximately .125 of a discount point. 4/32 Bonds 30 yr - 5.26% 70 Dow 51,420 265 NASDAQ 27,063 Mortgage Rate Trend Trailing 90 Days - National Average 30 Year Fixed 15 Year Fixed 5/1 ARM Indexes Affecting Rate Lock MediumNegativeADP EmploymentSeptember's ADP Employment report started this morning’s batch of economic data. It revealed 90,000 new private sector jobs were added to the economy last month. This was more than the 69,000 that was predicted, indicating strength in the private employer sector. Accordingly, we are labeling the report bad news for bonds and mortgage rates. MediumNeutralPersonal Income and OutlaysAugust’s Personal Income and Outlays data was the most important of today’s releases. The 8:30 AM ET release showed income rose only 0.2% when it was expected to be up 0.4%, but spending rose 0.9% to exceed forecasts of 0.8%. Lower income numbers mean consumers have less money to spend, limiting economic growth. However, it appears they spend more than expected last month despite the weaker increase in income. This allows us to consider this portion of the report to be neutral for mortgage rates. HighNeutralInflation NewsThe more influential readings in the 8:30 AM report were the PCE indexes that are the Fed’s preferred inflation gauges. The overall PCE reading for August rose 0.3%, appearing to fall short of the 0.4% that was expected. Furthermore, the more important core PCE that excludes volatile food and energy costs also came in under forecasts (up 0.2% vs 0.3%). While the weaker readings look to be good news for bonds, the truth is that the actual increases were extremely close to being rounded up to numbers that would have matched expectations. The annual PCE readings were unchanged from July’s downwardly revised numbers. LowNegativeGDP Rev 2 (month after Rev 1)Today’s third release was the second revision to the 2nd Quarter Gross Domestic Product (GDP) reading. This release gave us the biggest surprises with an upward revision to the GDP that now means the economy grew at an annual pace of 2.2% instead of the previously announced 1.5%. Also worth noting is that a secondary reading that is related to inflation was revised from 3.4% to 3.8%. Even though this data is quite aged now (current quarter’s activity set for release next month), these revisions were sizable and are likely contributing to this morning’s negative open. HighUnknownISM Index (Institute for Supply Management)Tomorrow brings us the weekly unemployment update and another of this week’s major reports. The more influential data will come from the Institute for Supply Management (ISM) who will post their September manufacturing index at 10:00 AM ET. We consider this to be highly important because it measures manufacturer sentiment and is usually the first report released that covers the preceding month. This month's update is expected to show a September reading of 54.8, indicating that manufacturer sentiment was a bit stronger than August's 54.6. A smaller than expected number would be good news for bonds and mortgage pricing. Float / Lock Recommendation 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... 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.
Wednesday’s bond market has opened in negative territory again following mixed economic data. Stocks are showing early gains with the Dow up 70 points and the Nasdaq up 265 points. The bond market is currently down 4/32 (5.26%), but gains late yesterday should allow for an improvement in this morning’s mortgage rates of approximately .125 of a discount point. 4/32 Bonds 30 yr - 5.26% 70 Dow 51,420 265 NASDAQ 27,063
Indexes Affecting Rate Lock MediumNegativeADP EmploymentSeptember's ADP Employment report started this morning’s batch of economic data. It revealed 90,000 new private sector jobs were added to the economy last month. This was more than the 69,000 that was predicted, indicating strength in the private employer sector. Accordingly, we are labeling the report bad news for bonds and mortgage rates. MediumNeutralPersonal Income and OutlaysAugust’s Personal Income and Outlays data was the most important of today’s releases. The 8:30 AM ET release showed income rose only 0.2% when it was expected to be up 0.4%, but spending rose 0.9% to exceed forecasts of 0.8%. Lower income numbers mean consumers have less money to spend, limiting economic growth. However, it appears they spend more than expected last month despite the weaker increase in income. This allows us to consider this portion of the report to be neutral for mortgage rates. HighNeutralInflation NewsThe more influential readings in the 8:30 AM report were the PCE indexes that are the Fed’s preferred inflation gauges. The overall PCE reading for August rose 0.3%, appearing to fall short of the 0.4% that was expected. Furthermore, the more important core PCE that excludes volatile food and energy costs also came in under forecasts (up 0.2% vs 0.3%). While the weaker readings look to be good news for bonds, the truth is that the actual increases were extremely close to being rounded up to numbers that would have matched expectations. The annual PCE readings were unchanged from July’s downwardly revised numbers. LowNegativeGDP Rev 2 (month after Rev 1)Today’s third release was the second revision to the 2nd Quarter Gross Domestic Product (GDP) reading. This release gave us the biggest surprises with an upward revision to the GDP that now means the economy grew at an annual pace of 2.2% instead of the previously announced 1.5%. Also worth noting is that a secondary reading that is related to inflation was revised from 3.4% to 3.8%. Even though this data is quite aged now (current quarter’s activity set for release next month), these revisions were sizable and are likely contributing to this morning’s negative open. HighUnknownISM Index (Institute for Supply Management)Tomorrow brings us the weekly unemployment update and another of this week’s major reports. The more influential data will come from the Institute for Supply Management (ISM) who will post their September manufacturing index at 10:00 AM ET. We consider this to be highly important because it measures manufacturer sentiment and is usually the first report released that covers the preceding month. This month's update is expected to show a September reading of 54.8, indicating that manufacturer sentiment was a bit stronger than August's 54.6. A smaller than expected number would be good news for bonds and mortgage pricing.
Float / Lock Recommendation 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... 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.