Wednesday’s bond market has opened in negative territory, giving up part of yesterday’s late rally. Stocks are mixed with the Dow down 32 points and the Nasdaq up 53 points. The bond market is currently down 3/32 (1.47%), but a nice rally late yesterday should still allow this morning’s mortgage rates to be lower than Tuesday’s early pricing by approximately .125 of a discount point. If you saw an intraday improvement yesterday afternoon, you may see a slight increase this morning to reflect this today’s early bond losses. 3/32 Bonds 30 yr - 1.47% 32 Dow 33,913 53 NASDAQ 14,306
Indexes Affecting Rate Lock HighPositiveFed TalkYesterday afternoon’s congressional testimony from Fed Chairman Powell eased concerns of the recent spike in inflation. He reassured everyone listening that the inflation we are seeing this year is only temporary and should start to ease early next year. That was taken as good news for the bond market because inflation devalues a long-term bond’s future fixed interest payments. This is why we tend to see yields and mortgage rates rise when inflation is a threat in the economy. His words heavily contributed to yesterday’s late bond rally and widespread improvements to mortgage pricing. LowPositiveNew Home SalesMay's New Home Sales report was posted at 10:00 AM ET, revealing a 5.9% decline in sales of newly constructed homes. Also worth noting is a downward revision to April’s sales of nearly two percentage points, indicating the new home portion of the housing sector was weaker than thought the past two months. While that is favorable news for bonds, the fact new home sales makes up such a small portion of all housing sales limits the impact it is having on today’s trading. MediumUnknownTreasury Auctions (5,7,10,20,30 year)We also have the first of this week’s two relevant Treasury auctions taking place today. The impact on bond trading will be determined by how strong investor interest was in the securities. 5-year Notes are being today, while 7-year Notes will go tomorrow. If these sales are met with a strong demand from investors, we could see bond prices rise and mortgage rates improve slightly during afternoon trading. On the other hand, if they draw a lackluster interest from investors, mortgage rates may move slightly higher during afternoon trading today and/or tomorrow. HighUnknownDurable Goods OrdersTomorrow has a couple of reports scheduled for release in addition to the weekly unemployment update. The monthly report is much more important than the others. That would be May's Durable Goods Orders at 8:30 AM ET. This Commerce Department report will give us an indication of manufacturing sector strength. It tracks orders at U.S. factories for big-ticket items, or products that are expected to last three or more years such as electronics, appliances and airplanes. This data is known to be quite volatile from month to month and is expected to show a 2.4% increase in May's new orders. The smaller the increase in orders, the better the news it is for mortgage pricing. LowUnknownGDP Rev 2 (month after Rev 1)Also set for release early tomorrow morning is the second revision to the 1st Quarter Gross Domestic Product (GDP) reading. The GDP is the sum of all products and services produced in the U.S. and is considered to be the best measurement of economic growth or contraction. However, this particular data is quite aged now (covers January through March) and will likely have little impact on the bond market or mortgage pricing unless it varies greatly from previous readings. Market participants are looking more towards next month's release of the current quarter's initial GDP reading. Last month's first revision showed a 6.4% annual rate of growth. Tomorrow’s update is expected to show the same. A large upward revision in the GDP would be considered negative for rates as it means the economy was stronger than thought. MediumUnknownWeekly Unemployment Claims (every Thursday)The weekly unemployment update is expected to show 380,000 new claims for unemployment benefits were filed last week. Rising claims is considered to be good news for bonds and mortgage rates because it is a sign the employment sector weakened. Therefore, the higher the number of new claims, the better the news it is for rates. Keep in mind though, this is only a weekly snapshot and its pandemic-related importance has worn significantly since just a few months ago.
Float / Lock Recommendation 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.