Mortgage Rates Improve 7-14-2017

By James Brooks

The bond market is up 8/32 (2.32%), which should improve Raleigh area mortgage rates by approximately .125 of a discount point.

Yesterday?s 30-year Treasury Bond auction was also uneventful with investor demand being at similar levels to Wednesday?s 10-year Note sale. The average level of interest in the securities prevented much of a reaction in bonds or mortgage rates yesterday afternoon.

This morning was quite active in terms of economic reports. We started with June's Retail Sales at 8:30 AM that showed sales fell 0.2% last month. This was weaker than the 0.1% increase that was expected. Another reading within the report that tracks sales excluding costly and volatile auto transactions, giving us more reliable and stable info, revealed a 0.2% decline when forecasts had it rising by the same amount. This report indicates that consumers spent much less last month than many had thought. Because consumer spending makes up over two-thirds of the U.S. economy and bonds tend to thrive in weaker economic conditions, this is clearly very good news for mortgage rates.

Also at 8:30 AM ET this morning was June's Consumer Price Index (CPI) that gives us a measurement of inflationary pressures at the consumer level of the economy. It came in unchanged from May?s reading with the core data rising 0.1%. The overall reading pegged expectations but the more important core data that excludes volatile food and energy costs was expected to rise 0.2%. The smaller increase means that core inflationary pressures were softer at the consumer level of the economy than analysts predicted. That makes the report favorable for bonds and mortgage rates as higher levels of inflation make bonds less appealing to investors and causes the Fed to raise short-term rates at a quicker pace.

June's Industrial Production data was released at 9:15 AM ET. It showed a 0.4% rise in production at U.S. factories, mines and utilities, matching forecasts. This is a sign of manufacturing sector strength, but since it didn?t show surprise strength or weakness and this is only a moderately important release, we have seen little impact in today's trading.

The final report of the week came at 10:00 AM ET when the University of Michigan posted their Index of Consumer Sentiment for July. The index stood at 93.1, falling short of June?s final reading of 95.1. Analysts were expecting not to see much of a change from June?s final reading, meaning surveyed consumers were less optimistic about their own financial and employment situations than many had thought. That is good news for bonds and mortgage rates because waning confidence means consumers are less likely to make a large purchase in the near future, limiting economic growth.

Next week has very little scheduled that is expected to influence mortgage rates. Corporate earnings season gets into high gear next week, so we can expect stock movement to be the biggest impact on bond trading and 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.

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