Friday’s bond market has opened in positive territory again following the release of favorable economic news. The stock markets are showing early losses with the Dow down 47 points and the Nasdaq down 18 points. The bond market is currently up 14/32, which should improve this morning’s mortgage rates by approximately .250 of a discount point.
Today’s economic releases were started by the Labor Department, who posted their Producer Price Index (PPI) readings for March at 8:30 AM ET. They announced that the overall PPI reading fell a larger than expected 0.6% and that the core reading rose 0.2%. The drop in the overall reading is good news for the bond market, but the core data exceeding forecasts of a 0.1% increase. The core data is the more important of the two because it excludes more volatile food and energy prices. Still, the size of the decline in the overall reading and the small miss in the core data allows us to consider this news favorable for the bond market and mortgage rates.
The Commerce Department gave us today’s second release with March’s Retail Sales data that was also posted early this morning. It revealed a 0.4% decline in retail-level sales, falling short of the no change that was expected. Since consumer spending makes up over two-thirds of our economy, the decline hints that economic growth will likely be subdued in the near future. That clearly makes the data good news for the bond market and mortgage pricing.
The final release of the week was the University of Michigan’s Index of Consumer Sentiment late this morning that showed a reading of 72.3 that was well below forecasts of 78.0. This means that surveyed consumers were much less optimistic about their own financial situations than many had thought. Since that hints that consumer spending may be weaker than previously thought in the near future, we can also consider this data as good news for mortgage rates.
Next week is fairly light in terms of relevant economic reports scheduled for release. There are a couple reports that are worth watching, including the Consumer Price Index (CPI) that is the sister report to today’s PPI and is considered a key inflation gauge. None of them are set for release Monday, so look for any weekend news (N. Korea, Eurozone financial and economic, etc) and stock gains or losses to be the biggest influence on bond trading and mortgage rates until we get to Tuesday’s events. Look for details on next week’s calendar 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.