Today's Commentary

Updated on June 28, 2016 10:30:27 AM EDT
Tuesday’s bond market has opened in negative territory as Brexit’s effect on the markets wane for the time being. Stocks are contributing to the early losses also with sizable gains in the major indexes. The Dow is currently up 197 points while the Nasdaq has gained 76 points. The bond market is currently down 8/32 (1.47%), but due to strength late yesterday we should see little change from Monday’s morning mortgage rates.

There were two pieces of economic data posted this morning, neither of which was considered highly important. The first came at 8:30 AM ET when the second revision to the 1st Quarter Gross Domestic Product (GDP) was posted. It came in at up 1.1%, slightly exceeding expectations of a 1.0% annual rate of growth and up from the previous estimate of 0.8%. This means that the economy was a little stronger during the first three months of the year than previously thought. That technically makes the data bad news for bonds and mortgage rates, but since this data is pretty aged now and analysts are more interested in the current quarter’s growth numbers that will be posted next month, it has had no impact on today’s trading.

June's Consumer Confidence Index (CCI) was released at 10:00 AM ET. The Conference Board announced a reading of 98.0 that greatly exceeded forecasts of 93.1. It was also a large jump from May’s revised 92.4 reading, indicating that surveyed consumers were much more optimistic about their own financial situations this month than was expected. Because strengthening confidence usually translates into higher levels of consumer spending that fuels economic growth, we should consider this data negative for mortgage rates.

May's Personal Income and Outlays data is scheduled for release Wednesday at 8:30 AM ET. This report gives us an indication of consumer ability to spend and current spending activity. They are important because consumer spending makes up over two-thirds of the U.S. economy. If consumer income is rising, they have more money to spend each month. Analysts are expecting to see an increase of 0.3% in income and also a 0.3% rise in the spending portion of the report. Smaller increases in both of these readings would be considered good news for the bond market 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 2016
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