Thursday, February 9, 2017 - Article by: James Brooks -
By James Brooks
The bond market is down 15/32 (2.38%), which should push today's mortgage rates higher by approximately .250 of a discount point.
We saw bonds turn south after yesterday’s 10-year Treasury Note auction. The results of the sale gave us mixed results on investor interest in the securities. It appears the indicators that point towards a weak interest were the main focus as selling started immediately after the results were posted. Mortgage bonds did make a respectable rebound before closing, but they did not get back to their pre-auction results though, leaving us with a slight increase in rates to carry into today's trading.
Last week's unemployment figures were posted at 8:30 AM ET this morning, showing that 234,000 new claims for unemployment benefits were filed last week. This was down from the previous week’s 246,000 initial claims and well below the 250,000 that was expected. Since declining claims is a sign of strength in the employment sector, this is bad news for bonds and mortgage rates.
We also have the 30-year Treasury Bond auction to watch tomorrow. As with today’s sale, a strong level of interest from investors would be good news for bonds and mortgage rates. Bad news would be a weak interest in the securities. Results will also be posted at 1:00 PM, so this will be an afternoon event tomorrow.
This week closes tomorrow with February's preliminary reading to the University of Michigan's Index of Consumer Sentiment. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. If it shows an increase in consumer confidence, the stock markets may move higher and bond prices could fall. It is currently expected to show a 98.0 reading, down from January's final reading of 98.5. That would indicate consumers were a little less optimistic about their own financial situations than last month and are less likely to make large a purchase in the near future. Since consumer spending makes up over two-thirds of the U.S. economy, this would be considered slightly positive news for bonds and mortgage pricing. Ideally, we would prefer to see a large decline in confidence.
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.
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