WEDNESDAY AFTERNOON UPDATE:

 

 •  This week’s FOMC meeting has adjourned with an announcement that key short-term interest rates were left unchanged for the third consecutive meeting. There were no major changes or notes in the statement that are relevant to rates.

 •  Chairman Powell stated in the press conference that he will be staying on as a Fed Governor after his successor as Chairman is approved by the Senate.

 •  The stock markets are still in negative territory, in most cases extending this morning’s early losses. The Dow is now down 310 points while the Nasdaq is down 13 points.

 •  The bond market, which had lost further ground long before the FOMC meeting had adjourned, is currently down 16/32 (4.41%). This is enough of a move from this morning’s levels to cause many lenders to issue an intraday increase to rates of approximately .125 of a discount point.

 •  Earlier today, March's Durable Goods Orders report revealed a 0.8% increase in new orders at U.S. manufacturers for big-ticket products such as airplanes, appliances and electronics. This was a little stronger than the 0.5% that was expected, but this data is known to be quite volatile from month to month. Therefore, a variance of this size isn’t nearly as meaningful as it would have been in many other reports.

 •  A secondary reading that excludes more volatile and costly transportation orders (airplanes) is what makes this report unfavorable for bonds and mortgage rates. That reading showed a 0.9% rise in new orders, exceeding forecasts of a 0.4% increase to signal strength in the manufacturing sector.

 •  This morning’s second release included February and March Housing Starts data that was previously delayed by the government shutdown. It showed no surprises in February’s new home groundbreakings, but March’s number was higher than anticipated. We are labeling the data bad news because of March’s higher number of starts even though the report didn’t seem to draw a reaction in the bond market or affect this morning’s mortgage pricing.

 •  Tomorrow has four pieces of data set for release, two of which are considered to be highly influential.

 •  One of the major releases will be the initial Gross Domestic Product (GDP) reading for the 1st quarter at 8:30 AM ET. The GDP is considered to be the benchmark indicator of economic growth or contraction since it is the total sum of all goods and services produced in the U.S. Market participants are expecting it to reveal the economy grew at an annual rate of 2.1% during the first three months of this year. A smaller growth rate would make bonds more appealing to investors and be considered good news for mortgage rates.

 •  The other key report is March's Personal Income and Outlays data, also at 8:30 AM ET. It helps us measure consumer ability to spend and current spending habits. If a consumer's income is rising, they have the ability to make additional purchases in the near future, fueling economic growth that raises inflation concerns and has a negative impact on the bond market and mortgage rates. Tomorrow's release is expected to show a 0.3% rise in income and a 0.9% jump in spending. Favorable results for rates would be smaller increases.

 •  More importantly are the Personal Consumption Expenditures (PCE) indexes in the spending and income report. These are the Fed's preferred inflation readings, so they draw a lot of attention. The overall PCE reading is predicted to be up 0.7% from February due to Iran-related higher fuel and energy costs while the more watched core PCE that excludes those volatile costs is expected to rise 0.3% for the month.

 •  On an annual basis, both PCE readings are expected to rise noticeably from February’s pace. Good news for mortgage pricing would be weaker PCE readings.

 •  The 1st Quarter Employment Cost Index (ECI) is one of the less important reports of the day. A large increase in labor costs means employers will need to pass those increases into the pricing of their products and services, fueling inflation. A smaller increase than the 0.8% rise that market analysts are predicting would be good news.

 •  Rounding out tomorrow’s early data will be last week’s unemployment figures. They are expected to show 212,000 new claims for jobless benefits were filed, down a little from the previous week’s 214,000. Rising claims are favorable for bonds because they are a sign of weakness in the employment sector. Accordingly, the higher the number of new filings, the better the news for mortgage rates.

 •  The first two referenced reports carry significantly more influence in the markets than the latter two. This means the GDP and PCE readings will drive bond trading tomorrow much more than the other two.
 • Visit our Daily Commentary page on our site for detailed explanations on current news that is relevant to mortgage rates.

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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.