Tuesday, September 30, 2014 - Article by: James Brooks -
By James Brooks
The bond market is currently down 1/32 (2.48%), which should keep today's mortgage rates at the same level as yesterday's rates.
Today's only relevant economic data came late this morning when the Conference Board released this month's Consumer Confidence Index (CCI) at 10:00 AM ET. It showed a reading of 86.0 that was well short of expectations. Analysts were calling for a reading of 92.0, meaning surveyed consumers were less optimistic about their own financial and employment situations than many had thought. That is good news for bonds because waning confidence usually means consumers are less likely to make a large purchase in the near future, helping to limit economic growth.
Tomorrow has two reports scheduled for release that are likely to affect mortgage pricing. First up is the ADP Employment report for September at 8:15 AM ET. It has the potential to cause movement in the markets if it shows much stronger or weaker numbers than expected. This report tracks changes in private-sector jobs of ADP's clients that use them for payroll processing. While it does draw attention, it is my opinion that it is overrated and is not a true reflection of the broader employment picture. It also is not accurate in predicting results of the monthly government report that follows a couple days later. Still, because we have recently seen reaction to the report, we will be watching it. Analysts are expecting it to show that 200,000 new payrolls were added. The lower the number of jobs, the better the news it is for mortgage rates.
The Institute for Supply Management (ISM) will post their manufacturing index for September at 10:00 AM ET tomorrow. This index measures manufacturer sentiment and it can be heavily influential on the markets and mortgage rates. Analysts are expecting to see a decline from August's 59.0 reading, meaning surveyed manufacturers felt business conditions were a little weaker in September than they were in August. This data is important not only because it measures manufacturer sentiment, but it is also very recent data. Some economic releases track data that are 30-60 days old. But the ISM index is only a few weeks old and usually the first report we see each month. If it reveals a reading below 58.3, meaning sentiment fell short of expectations, we should see the bond market move higher and mortgage rates fall tomorrow morning.
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.
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