Wednesday, August 17th
Wednesday’s bond market has opened in negative territory due to overseas economic news that raised inflation concerns on the global scale. Stocks are showing early losses with the Dow down 134 points and the Nasdaq down 105 points. The bond market is currently down 22/32 (2.88%), which should lead to an increase of approximately .250 of a discount point in this morning’s mortgage rates.
22/32
Bonds
30 yr - 2.88%
134
Dow
34,017
105
NASDAQ
12,997
Trailing 90 Days - National Average
High
Neutral
Kicking off today’s schedule of events was July's Retail Sales report at 8:30 AM ET. The Commerce Department announced that retail level sales were unchanged last month from June. This was a bit weaker than the 0.2% increase that was expected. However, a secondary reading that excludes more volatile and costly auto transactions rose 0.4% when it was expected to show a 0.1% rise. The mixed headline numbers allow us to label the report neutral to slightly negative for bonds and mortgage rates. It is worth noting that this morning’s weakness in bonds started long before the data was released. The report certainly didn’t help correct the early selling, but it is not the cause of it either.
Medium
Unknown
We have two things taking place this afternoon that we will be watching, starting with the results of today’s 20-year Treasury Bond auction at 1:00 PM ET. If investor demand was strong, we could see the broader bond market improve and mortgage rates move slightly lower during early afternoon trading. On the other hand, a lackluster interest could pressure bonds and lead to a slight upward revision to rates before the end of the day.
Medium
Unknown
The second afternoon event will be the release of the minutes from last month’s FOMC meeting. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation and future monetary policy moves. Since the minutes will be released at 2:00 PM ET, if there is a market reaction to them it will be evident during mid-afternoon trading. This is one of those events that can cause significant movement in rates after its release or be a non-factor. Therefore, be prepared for a move, but not surprised if the impact on rates is minimal.
Low
Unknown
Tomorrow has three pieces of economic data for the markets to digest. The first is last week’s unemployment figures at 8:30 AM ET. They are expected to show 266,000 new claims for benefits were filed during the week. Since rising claims are a sign of employment sector weakness that makes bonds more attractive to investors, a larger number would be good news for rates.
Medium
Unknown
Next up will be July's Leading Economic Indicators (LEI) at 10:00 AM ET. The Conference Board, who is New York-based business research group, is expected announce a 0.5% decline from June. The indicators attempt to predict economic activity over the next several months, so a larger decline would be considered favorable for rates. Bonds tend to thrive in weaker economic conditions, leading to lower yields and mortgage rates.
Medium
Unknown
July's Existing Home Sales report is tomorrow’s third report, also coming at 10:00 AM ET. The National Association of Realtors will give us this measurement of housing sector strength. It covers a high percentage of all home sales in the U.S., but usually does not have a major influence on bond trading and mortgage rates unless it varies greatly from analysts' forecasts. It is expected to show a decline from June's sales, meaning the housing sector softened a little last month. A weakening housing sector makes broader economic growth less likely. Accordingly, the lower the number of sales, the better the news it is for mortgage rates.
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.