Friday, December 20th
Friday’s bond market has opened in positive territory following favorable inflation news. Stocks are mixed with the Dow up 119 points and the Nasdaq down 15 points. The bond market is up 13/32 (4.52%), which should improve this morning’s mortgage rates by .250 - .375 of a discount point.
13/32
Bonds
30 yr - 4.52%
119
Dow
42,461
15
NASDAQ
19,357
Trailing 90 Days - National Average
High
Positive
This morning’s important economic data came in November's Personal Income and Outlays report at 8:30 AM ET that gave us a sign inflation slowed some last month. This report has a good number of readings that bond traders are interested in, including the Fed’s preferred inflation gauges, and they all can be labeled favorable for rates. Most importantly, the overall and core PCE readings both fell short of forecasts, rising only 0.1% last month when they were expected to be up 0.2%. They both also came in lighter than expected on a year-over-year basis, up 2.8% and 2.4% respectively.
Medium
Positive
The other headline numbers in the report weren’t nearly as influential as the inflation readings but still are relevant. Income was 0.3% and spending rose 0.4%. Both were 0.1% short of forecasts to indicate consumers had less money to spend than thought and spent less than predicted. Rising income fuels the ability for consumers to spend more and that category makes up over two-thirds of the U.S. economy. Therefore, softer than expected numbers are good news for bonds and mortgage rates.
Medium
Neutral
Today’s second report was December’s revised Index of Consumer Sentiment from the University of Michigan. They announced a reading of 74.0 that was unchanged from the initial estimate two weeks ago. Rising confidence in their own financial situations means consumers feel better about their own financial situations and are likely to spend more. Since there was no surprise in the update, there was no reaction to the data. Accordingly, we are considering the report to be neutral for mortgage rates.
Medium
Unknown
Next week has a few relevant economic reports scheduled around the Christmas holiday, none of which are considered to be key releases. They begin late Monday morning with December’s Consumer Confidence Index that will give us the same type of info that this morning’s second release did. It will come from the Conference Board, who is not a governmental agency.
Medium
Unknown
The markets will close early Tuesday and reopen Thursday, albeit likely with a skeleton crew and light or thin trading after the holiday. Furthermore, the looming government shutdown set for midnight tonight could start affecting some of the data releases as early as next week if it is not averted this weekend. Look for details on all of next week’s activities in Sunday evening’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.