Tuesday’s bond market has opened in negative territory despite another round of early stock selling. The major stock indexes are showing sizable losses again, pushing the Dow lower by 249 points and the Nasdaq down 86 points. The bond market is currently down 7/32 (1.62%), which should cause an increase in this morning’s mortgage rates of approximately .375 of a discount point if comparing to Monday’s early pricing. Some lenders revised rates higher late yesterday as bonds weakened. If you saw a change before closing Monday, you should see a smaller increase than .375 in this morning’s pricing.
There is nothing of importance scheduled for release today other than a handful of Fed member speaking engagements. This morning’s bond selling has brought the benchmark 10-year Treasury Note yield back to a key level. If 1.62% acts as a ceiling, meaning it fails to break above that threshold, we should see rates hold at this morning’s levels and possibly move lower soon. On the other hand, if it closes above 1.62%, we may see an upward trend in rates over the next few days.
April's Consumer Price Index (CPI) will start this week’s activities at 8:30 AM ET tomorrow. This report measures inflationary pressures at the consumer level of the economy and its results are watched closely because rising inflation makes long-term securities, such as mortgage-related bonds, less attractive to investors. With inflation such a hot topic in the markets currently, this type of report will have an even heavier impact on rates than usual. The overall reading is expected to rise 0.2% while the more important core data is predicted to rise 0.3%. Favorable news for bonds and mortgage rates will be smaller increases.
The first of this week’s two relevant Treasury auctions will take place tomorrow also. 10-year Notes will be auctioned tomorrow while 30-year Bonds will be sold Thursday. Results of each sale will be posted at 1:00 PM ET. If they are met with a strong demand from investors, we could see bond prices rise enough during afternoon trading to cause downward revisions to mortgage rates. However, lackluster bidding in the sales, meaning longer-term securities are losing their appeal, could lead to higher mortgage pricing.
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.
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