Tuesday’s bond market has opened up slightly following favorable economic news. Stocks are mixed with the Dow down 444 points and the Nasdaq up 194 points. The bond market is currently up 1/32 (4.20%), which should improve this morning’s mortgage rates by approximately .125 of a discount point.

This morning’s release of January's Consumer Confidence Index (CCI) revealed consumers are far less optimistic about their own financial situations than many had thought. January’s reading of 84.5 fell well short of forecasts and December’s upwardly revised 94.2. It was also the lowest reading since 2014, even lower than during the COVID crisis. Since lower levels of consumer confidence usually translate into weaker consumer spending that makes up over two-thirds of the U.S. economy, today’s report is good news for bonds and mortgage rates. The report erased early morning weakness in bonds.

We also have a 5-year Treasury Note auction taking place today that may have a minor impact on this afternoon’s mortgage pricing. Mortgage rates are based on long-term debt and these are mid-term securities. If there is a reaction in the bond market to the 1:00 PM ET results announcement, it likely won’t be enough to cause an intraday revision to mortgage rates. Treasury auctions that draw a strong demand from investors are considered to be good news.

Tomorrow’s only events worth watching begin when the year’s first FOMC meeting comes to an end at 2:00 PM ET. It is widely expected that the Fed will leave key short-term interest rates alone as they wait to see which direction inflation is heading after their three consecutive .250 point cuts late last year. Assuming they do indeed make no change tomorrow, traders will be looking at the post-meeting statement for hints about when they will make their next move. An indication of another rate cut coming sooner than later should draw a positive reaction in the bond market and lead to lower mortgage rates tomorrow afternoon. The post-meeting statement will also be released at 2:00 PM ET, followed by a press conference with Chairman Powell at 2:30 PM ET. This meeting does not include revised economic projections or the dot-plot used for predicting where short-term rates will be in the future.

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.