Today's Commentary

Updated on March 31, 2015 10:15:10 AM EDT
Tuesday’s bond market has opened relatively flat despite stronger than expected economic news. The stock markets are showing sizable losses, erasing a good part of yesterday’s rally. The Dow is currently down 81 points while the Nasdaq has fallen 18 points. The bond market is currently up 2/32 (1.94%), which should keep this morning’s mortgage rates at yesterday’s levels.

March’s Consumer Confidence Index (CCI) was the sole relevant economic release of the day. It came from the Conference Board at 10:00 AM ET, who is a business research group and not a governmental agency. They announced a reading of 101.3 that greatly exceeded forecasts of 96.2. An upward revision to February’s reading has softened the surprise, but it still shows that consumers felt better about their own financial and employment situations this month than many had thought. That makes the data bad news for the bond and mortgage markets because rising confidence usually means consumers are willing to spend more money, fueling economic growth.

Tomorrow has two reports set to be posted with both having the potential to cause movement in mortgage rates. The first will be the ADP Employment report at 8:15 AM ET. 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 usually follows a couple days later. Still, because we could see at least a moderate reaction to the results, we will be watching it. Analysts are expecting it to show that 225,000 new payrolls were added. The lower the number of jobs, the better the news it is for mortgage rates.

The second report of the day is actually one of the week’s two highly important ones. The Institute for Supply Management (ISM) will release their manufacturing index at 10:00 AM ET. This index gives us an important measurement of manufacturer sentiment by surveying manufacturing executives. It is the first piece of data that we see each month that covers the preceding month. In other words, it is the freshest economic data each month. A reading above 50 means more surveyed executives felt business improved during the month than those who said it had worsened. This month's report is expected to show a reading of 52.5, which would be a decline from February's reading of 52.9. This means that analysts think business sentiment slipped from last month's level. That would be relatively good news for the bond market and mortgage rates, although a noticeable decline would be better for rates. The higher the reading, the worse news it is for bonds and mortgage rates.

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... 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.

 ©Mortgage Commentary 2015
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