Daily Rate Lock Advisor

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Example of Past comments..



Friday's bond market has opened in negative territory again following another round of stronger than expected economic data. The stock markets are also reacting negatively to the news with the Dow down 42 points and the Nasdaq down 2 points. The bond market is currently down 6/32, which with yesterday's further losses during late trading, will likely push this mor ning's mortgage rates higher by approximately .250 - .375 of a discount point.

The Labor Department said this morning that November's Consumer Price Index (CPI) rose 0.8% while the core data reading rose 0.3%. Both of these readings exceeded forecasts, but the variance was minimal compared to yesterday's surprises in the PPI. Still, the higher than expected inflation readings at the consumer level of the economy does brings concern about inflation in the economy. This had led to this morning's selling in bonds.

November's Industrial Production report was also posted, showing a 0.3% rise in output. This was slightly stronger than the 0.2% that was expected and indicates that manufacturing activity was a little stronger than thought, but it has not had much of an impact on this morning's rates.

Next week brings us the release of a handful of reports for the markets to digest. However, none of them are as important as some of this week's data was. The first comes Tuesday but the first one that may affect mortgage rates doesn't come until Thursday. 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... Lock if my closing was taking place between 21 and 60 days... Lock 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.
 

 



Thursday's bond market has opened in negative territory again following the release of much stronger than expected economic data. The stock markets are also reacting negatively to the news with the Dow down67 points and the Nasdaq down 20 points. The bond market is currently down 13/32, but the impact on this morning's mortgage rates will be minimal due slight str ength in bonds late yesterday.

The Commerce Department gave us one of today's highly important reports, showing that sales at the retail level of the economy rose 1.2% last month. This twice the forecasted level of up 0.6% and indicates that consumers were much more active than analysts had thought. This is bad news for bonds and mortgage rates because consumer spending makes up two-thirds of the U.S. economy. With spending rising, inflation concerns hurt bond prices because inflation erodes the value of a bond's future fixed interest payments. That usually drives mortgage rates higher.

The second major report of the day came from the Labor Department who posted November's Producer Price Index (PPI). It showed a whopping 3.2% jump in the overall index while the core data rose 0.4%. Both of those readings were at least double of forecasts and strongly hint that inflationary pressures may be rising. This is very bad news for bonds, especially if those press ures are carrying into the consumer side of the economy.

We will again see two reports posted tomorrow. Friday's big news is November's Consumer Price Index (CPI). It is similar to today's PPI, except it tracks inflationary pressures at the consumer level of the economy. Current forecasts call for an increase of 0.6% in the overall index and a 0.2% rise in the core data reading. It will be interesting to see if we had similar spikes in prices as today's PPI showed. If so, I would expect bond prices to fall relatively sharply and mortgage rates spike higher tomorrow.

November's Industrial Production report is also scheduled to be posted tomorrow and is considered to be of moderately high importance to the financial and mortgage markets. It gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. Analysts are expecting this report to show a 0.2% increase in output. However, the CPI will likely be the big gest influence on bonds and mortgage rates tomorrow.

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... Lock 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 down sharply, giving back nearly all of yesterday's gains. The stock markets are rallying today, recovering more than half of yesterday's losses. The Dow is currently up 164 points while the Nasdaq has gained 46 points. The bond market is currently down 46/32, which will erase all of yesterday afternoon's improvements in rates . This will take mortgage pricing back to near yesterday's morning rates.

Today's only economic news was irrelevant to the volatility in the markets. October's Goods and Services Trade Balance was posted this morning, showing a $57.8 billion trade deficit. This was a little larger than expected, but due to its low importance has not affected bond trading or mortgage rates.

This morning's selling in bonds and stock rally are being fueled by news that the Fed is creating four interim auctions during the rest of this month and next month to help inject cash into the financial system. This was met with a good response from stock investors but the additional supply of securities has bond traders selling holdings. The result is bond prices falling and mortgage rates rising today. While the announcement of the auctions does come as a surprise, the rebound in stocks and bond weakness does not. This was the basis of the recommendation of locking at yesterday's or this morning's rates.

The first important data of the week comes early tomorrow morning with the release of November's Retail Sales report. This data is very important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely. Current forecasts call for it to show a 0.6% increase in sales from October's levels. If it reveals weaker than expected sales, the bond market should thrive and mortgage rates should fall as a result. A stronger than expected reading could fuel stock market gains and push mortgage rates higher tomorrow morning.

Also tomorrow, the Labor Department will release November's Producer Price Index (PPI). This index measures inflationary pressures at the producer level of the economy. There are two portions of the index that are used- the overall reading and the core data reading. The core data is the more important of the two because it e xcludes more volatile food and energy prices. If tomorrow's release reveals stronger than expected readings, indicating that inflationary pressures are rising, the bond market will probably react negatively and should drive mortgage rates higher. If we see in-line or weaker than expected numbers, the bond market should fair well and mortgage rates should fall. Current forecasts are showing a 1.5% rise in the overall index and a 0.2% rise in the core data.

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... Lock 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.
 

 



TUESDAY AFTERNOON UPDATE:


Today's FOMC meeting has adjourned with an announcement of another quarter point rate cut by Mr. Bernanke and friends. This was the most popular move with analysts and market participants, but as expected, the markets have reacted strongly. Stocks have dropped considerably while bonds have rallied since the announcement. The Dow currently stands down 177 points from yesterday's closing level while the Nasdaq has fallen 35 points. The bond market is now up 42/32, which will likely improve this afternoon's mortgage rates by approximately .25 of a discount point over this morning's rates.

This was the third consecutive meeting with a rate cut, which will mean immediately lowered credit card and home equity loan rates for consumers and cheaper borrowing costs for corporate borrowers. In the post-meeting statement, the Fed indicated that more rates cuts may be needed to prevent the economy from slipping into a recession, but also hinted that inflation still a concern. Still, bonds are rallying hard while stocks are falling. I think this afternoon's bond strength is partly being fueled by the stock weakness than directly by the Fed's rate cut or statement.

I am shifting to a float recommendation across the board simply to capture this afternoon's and possibly tomorrow morning's improvements. I will likely be moving back towards locking before we get to this week's key data, especially since two of them address inflationary pressures.

There was no relevant economic news released today. We will see October's Goods and Services Trade Balance report posted early tomorrow morning. This report gives the size of the U.S. trade deficit, but it is the week's least important release. It is expected to show a $57.0 billion trade deficit. Unless it varies greatly from forecasts, I don't expect it to affect mortgage pricing.

The first important data of the week comes early Thursday morning with the release of November's Retail Sales report. This data is very important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely. Current forecasts call for it to show a 0.6% increase in sales from October's levels. If it reveals weaker than expe cted sales, the bond market should thrive and mortgage rates should fall as a result. A stronger than expected reading could fuel stock market gains and push mortgage rates higher Thursday morning.

Also Thursday and just as important as the sales data, the Labor Department will release November's Producer Price Index (PPI). This index measures inflationary pressures at the producer level of the economy. There are two portions of the index that are used- the overall reading and the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices. If Thursday's release reveals stronger than expected readings, indicating that inflationary pressures are rising, the bond market will probably react negatively and should drive mortgage rates higher. If we see in-line or weaker than expected numbers, the bond market should fair well and mortgage rates should fall. Current forecasts are showing a 1.5% rise in the overa ll index and a 0.2% rise in the core data.

If I were considering financing/refinancing a home, I would.... Float 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.
 

 



Monday's bond market has opened in negative territory as Friday's selling carries into the new week. The stock markets are showing gains with the Dow up 95 points and the Nasdaq up 15 points. The bond market is currently down 12/32, which will likely push this morning's mortgage rates higher by approximately .250 - .375 of a discount point over Friday's morning rates.

There is no relevant economic news scheduled for release today or tomorrow, but the rest of the week is fairly busy. There are five monthly reports scheduled for release between Wednesday and Friday along with tomorrow's FOMC meeting.

There is much debate about what the Fed will do at tomorrow's meeting. There seems to be a slight consensus that another rate cut is coming, but much with debate on the size. Some are predicting a quarter point cut while others are calling for a half point. There are still some analysts that think the Fed may wait until early next year before making another move. The lack of a wide consensus means that we will likely see plenty of movement in the markets regardless of what the Fed does tomorrow. The post meeting statement usually has a significant influence on the markets and mortgage rates, but the results of the actual meeting are usually not much of a surprise. Accordingly, this particular meeting may bring more vol atility than usual.

Overall, expect to see a pretty volatile week in the financial markets and mortgage pricing. The biggest event of the week is tomorrow's FOMC meeting, but Thursday's Retail Sales and PPI reports and Friday's CPI index can also cause a great deal of movement in rates. Due to the expected volatility, I am holding the current lock recommendations. However, please maintain constant contact with your mortgage professional if you have not locked an interest rate yet.

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... Lock 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.