Today's Commentary

Updated on September 28, 2016 10:31:39 AM EDT
Wednesday’s bond market has opened up slightly, following suit with stocks. The major stock indexes are showing modest gains of 20 points in the Dow and 1 point in the Nasdaq. The bond market is currently up 2/32 (1.55%), which should keep this morning’s mortgage rates unchanged from yesterday’s morning pricing.

Yesterday’s 5-year Treasury Note auction went fairly well with several benchmarks we use to gauge investor interest in the securities showing a pretty decent demand. The bond market had little reaction to the sale yesterday, but those results do allow us to be optimistic about today’s 7-year Note auction. If there is a strong level of interest in today’s sale, we may see bonds do well during afternoon trading. On the other hand, a weak auction could lead to pressure in bonds and a slight upward revision to mortgage pricing. Results will be posted at 1:00 PM ET, so any reaction will come during early afternoon trading.

Today’s only important economic data was August's Durable Goods Orders at 8:30 AM ET. It showed no change in new orders for big-ticket products from July’s level. That headline is technically bad news for bonds and mortgage rates because analysts were expecting to see a moderate decline in orders. However, a secondary reading that excludes orders for transportation-related products such as new airplanes showed a 0.4% decline that matched expectations. So while overall orders were stronger than predicted, the core products that are less costly and volatile pegged forecasts. That makes the news neutral to slightly negative for bonds and mortgage shoppers.

Tomorrow morning has two pieces of economic data scheduled for release, neither of which is considered to be highly important. The first is the second revision to the 2nd Quarter Gross Domestic Product (GDP) at 8:30 AM ET. Since this data is aged now and the preliminary reading of the 3rd Quarter GDP will be released next month, I don't see this revision having much of an impact on the financial markets or mortgage pricing. The GDP is important because it is the total sum of all goods and services produced within the U.S. and is considered the best measurement of economic activity. It is expected to show that the economy grew at an annual rate of 1.3%, up from last month's estimate of 1.1%. The lower the number, the better the news it is for mortgage rates. However, unless there is a significant change in this reading, it likely will not influence mortgage rates.

The other release tomorrow morning is last week’s unemployment update at 8:30 AM ET. It will give us a small snapshot of the employment sector and is expected to show that 259,000 new claims for unemployment benefits were filed last week, up from the previous week’s 252,000. The higher the number of claims, the better the news it is because rising claims indicates a softening labor market. But since this is only a weekly report, it likely will not have much of an impact on mortgage rates either unless it shows a sizable variance from forecasts.

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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