No Change In Today's Mortgage Rates 10-11-2017
By James Brooks
The bond market is up 2/32 (2.34%), which should keep Raleigh area mortgage rates unchanged.
There is no relevant economic data being released today but we do have a couple of afternoon events that may affect mortgage rates. One will be the first of this week's two important Treasury auctions. 10-year Notes will be sold today while 30-year Bonds will go tomorrow. We often see some weakness in bonds ahead of the sales as the firms participating prepare for them. However, as long as the auctions are met with decent demand from investors, the firms usually buy them back. This tends to help recover any presale losses. But, if the sales are met with a lackluster interest from investors- particularly international buyers, the bond market may move lower after the results are posted and mortgage rates may move higher. Those results will be announced at 1:00 PM each sale day, so any reaction will come during early afternoon trading.
Also this afternoon will be the release of the minutes from the most recent FOMC meeting. These may move the markets or could be a non-factor, depending on what they say. The key points traders are looking for are concerns over our and the global economies, inflation, reducing the Fed?s balance sheet and the Fed's next monetary policy move (rate hike). It is worth noting though that the last FOMC meeting was followed by revised economic predictions and a press conference with Fed Chair Yellen. Therefore, the likelihood of seeing a significant surprise in the minutes is relatively low. They will be posted at 2:00 PM ET.
Tomorrow?s sole monthly release is September's Producer Price Index (PPI). This index measures inflationary pressures at the manufacturing level of the economy and is considered to be highly important to the bond market. Analysts are expecting to see a 0.4% rise in the overall index and an increase of 0.2% in the more important core data reading. A larger than expected increase in the core reading could raise inflation concerns, pushing bond prices lower and mortgage rates higher. Inflation is the number one nemesis of the bond market because it erodes the value of a bond's future fixed interest payments. Unexpected growth in inflation also makes a Fed rate hike likely to be sooner than later. When inflation is a threat, even down the road, bonds sell for discounted prices that push their yields higher. And since mortgage rates tend to follow bond yields, this leads to higher rates for mortgage borrowers.
The second release of the day will be last week?s unemployment update. This report is expected to show that 255,000 new claims for unemployment benefits were filed last week, down from the previous week?s 260,000. Rising initial claims are a sign of employment sector weakness, so the larger the number of claims, the better the news it is for mortgage rates. Although, because this is only a weekly reading we usually need to see a significant variance from forecasts for it to impact 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.