Today's Commentary

Updated on April 27, 2015 10:39:11 AM EDT
Monday’s bond market has opened in negative territory with stocks starting the week in positive ground. The Dow is currently up 71 points while the Nasdaq has gained 23 points. The bond market is currently down 9/32 (1.94%), but due to strength late Friday we should see little change in this morning’s mortgage rates.

There is nothing of importance scheduled for release today. However, the rest of the week brings us the release of six economic reports that may affect mortgage rates in addition to an FOMC meeting and a couple Treasury auctions. Two of the week's reports are considered to be extremely important to the financial and mortgage markets and can cause a great deal of volatility. Throw in the FOMC meeting and we have the makings of a highly important week, not only for mortgage rates but also for the broader financial markets.

April's Consumer Confidence Index (CCI) will kick-off the week's schedule at 10:00 AM ET tomorrow. This index is considered to be an indicator of future spending by consumers. The Conference Board surveys 5,000 consumers from across the country about their personal financial situations. If sentiment is strong or rising, it is believed that consumers are more apt to make large purchases in the near future. However, if they are concerned about issues such as job security and savings, they will probably delay making large purchases. The latter is better for the bond market and mortgage rates because the expected slowdown in spending would keep inflation and economic growth to a minimum. On the other hand, a sizable increase could hurt the bond market, pushing mortgage rates higher tomorrow morning. It is expected to show a reading of 102.2, which would be an increase from March's 101.3 reading. The lower the reading, the better the news it is for mortgage rates.

Tomorrow also has the first of this week’s two Treasury auctions that have the potential to influence mortgage pricing. There will be an auction of 5-year Treasury Notes tomorrow and 7-year Notes on Wednesday. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions to mortgage rates. On the other hand, strong sales usually make government securities more attractive to investors and bring more funds into bonds. The buying of bonds that follows usually translates into lower mortgage rates. Results of the sales will be posted at 1:00 PM ET each auction day, so look for any reaction to come during afternoon hours.

Overall, I am expecting it to be a pretty active week for the markets and mortgage rates. We have several days that appear likely to be particularly volatile. Wednesday looks to be the best candidate for most important due to the GDP reading and FOMC meeting. The calmest day should be today. If floating an interest rate and closing in the near future, I strongly recommend maintaining contact with your mortgage professional this week.

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... 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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