Friday’s bond market has opened in negative territory following mixed economic news and overnight weakness that carried into this morning’s session. Stocks are showing early gains of 232 points in the Dow and 139 points in the Nasdaq. The bond market is currently down 5/32 (4.11%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point.

This morning’s big news was the release of the previously delayed Personal Income and Outlays report from September. The most important readings in the report are the Personal Consumption Expenditures (PCE) indexes that the Fed uses as their primary inflation gauge. Today’s release revealed a 0.3% increase in the overall September PCE while the core reading rose 0.2%. Both the overall and core readings stood at 2.8% on a year-over-year basis. All of the PCE readings pegged forecasts except the annual core that was a tad softer than expected.

The other headline numbers in the report didn’t give any surprises. Personal income rose 0.4% and income rose 0.3% in September. Both of these numbers matched expectations. Since this data is aged now and there was no significant variance from forecasts, we saw the bond market show little reaction to the release. It is overnight weakness and this morning’s second report that is fueling the early bond losses and increase in rates.

Today’s second report was December’s preliminary Index of Consumer Sentiment from the University of Michigan at 10:00 AM ET. They announced a reading of 53.3 that was higher than expected and an increase from November’s 51.0. The increase means more surveyed consumers feel better about their own financial situation now than they did last month. Because rising confidence usually translates into stronger consumer spending that fuels economic growth, this report has to be label negative for bonds and mortgage rates.

Next week doesn’t have much in terms of economic data for the markets to digest, but it does bring us the much-debated FOMC meeting and a couple of Treasury auctions that can affect mortgage rates more than the other monthly auctions. This meeting also includes updated economic projections and dot plot from the Fed. Most of the week’s activities come over the middle days, leaving weekend headlines to drive bond trading and mortgage pricing Monday. We should see a very active week in the markets, meaning plenty of movement in mortgage pricing also. Look for details on all of next week’s calendar in Sunday evening’s weekly preview.

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.