More Movement In Today's Mortgage Rates 1-25-2018
By James Brooks
The bond market is down 12/32 (2.61%), which should push Raleigh Area mortgage rates higher by approximately .125 of a discount point.
Yesterday?s 5-year Treasury Note auction went fairly well with several benchmarks indicating an above average demand for the securities. Bonds did improve a little after results were posted, but not enough for some lenders to revise rates intraday. However, that does allow us to remain optimistic about today?s 7-year Note sale. If it is met with a strong demand from investors, the broader bond market may improve again later today. Results will be posted at 1:00 PM ET, so any reaction will come during early afternoon trading.
The first of today?s two minor economic releases was last week's unemployment figures at 8:30 AM ET. They showed that 233,000 new claims for unemployment benefits were filed last week, up from the previous week?s revised 216,000 initial filings. Rising claims is a sign of a softening employment sector, so the increase is technically favorable news for bonds. Unfortunately, the variance from forecasts wasn?t enough in a weekly report for the news to directly influence mortgage rates.
December's Leading Economic Indicators (LEI) was released at 10:00 AM this morning. The Conference Board announced a 0.6% rise, meaning the indicators are predicting moderate economic growth over the next several months. Analysts were expecting to see a 0.5% rise, meaning the difference from expectations was minimal. This is also a minor piece of data, preventing much of a reaction in the bond and mortgage markets this morning.
Tomorrow brings us the big news of the week with two important economic reports early morning. The day will start with what is arguably the single most important economic report that we see regularly. This would be the initial quarterly Gross Domestic Product (GDP) reading. Tomorrow's release is the first of three we will get for the 4th quarter. This data is so important because it is considered to be the best measurement of overall economic activity. The GDP itself is the total sum of all goods and services produced in the United States. Its results usually have a major impact on the financial markets and can cause significant changes in mortgage rates if there are surprises. This initial reading will be followed by two revisions, each released approximately one month apart. Last quarter's first reading, which usually carries the most significance, is expected to show the economy grew at an annual rate of 2.9%. A noticeably weaker reading would be great news for the bond market, questioning the strength of our economy. That would likely fuel stock selling and a rally in bonds that should push mortgage rates lower tomorrow morning. However, a larger than expected increase, indicating the economy was stronger than thought, is likely to cause bond selling that leads to higher mortgage rates.
Next is December's Durable Goods Orders, also at 8:30 AM ET. It helps us measure manufacturing strength by tracking new orders at U.S. factories for products that are expected to last three or more years. These are also known as big-ticket items and include things such appliances, electronics and airplanes. The data is known to be quite volatile from month-to-month, so a large headline number isn't necessarily a concern. It is expected to show a rise in orders of 0.9%. A large drop in orders would be considered good news for bonds and mortgage rates. Even though this an important report, a slight variance likely will have little impact on tomorrow's mortgage pricing because of the large swings that are common in the data. The large decline that would indicate weakness in the manufacturing sector and be good news for mortgage rates.
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.