Some Improvement For Mortgage Rates 11-28-2017
By James Brooks
The bond market is up 5/32 (2.31%), which should improve Raleigh area mortgage rates by approximately .125 of a discount point.
Yesterday?s 5-year Treasury Note auction was uneventful with the indicators pointing towards and average or slightly better demand for the securities. The bond market had little reaction to the news when results were posted at 1:00 PM ET yesterday. However, it does allow us to be a little optimistic about today?s 7-year Note sale. If it is met with a strong investor demand, we could see bond prices improve slightly this afternoon. Results will again be posted at 1:00 PM ET, so any reaction will come during early afternoon trading.
Today?s sole piece of economic data was November's Consumer Confidence Index (CCI) at 10:00 AM ET. The Conference Board announced a reading of 129.5 that exceeded forecasts and October?s revised 126.2. It was the highest reading since November 2000, meaning consumer confidence in their own financial and employment situations is at its best levels in a long time. That is bad news for bonds and mortgage rates because rising levels of confidence usually translate into stronger consumer spending that fuels economic growth. Fortunately, this is only a moderately important report that hasn?t had much of an impact on today?s trading.
Tomorrow is a pretty busy day in terms of scheduled events that may affect mortgage pricing. It begins with the first revision to the 3rd Quarter Gross Domestic Product (GDP) at 8:30 AM ET. This release is expected to show an upward revision to last month's preliminary reading of a 3.0% annual rate of growth. The GDP measures the total of all goods and services produced in the U.S. and is considered to be the benchmark measurement of economic growth. Current forecasts call for a 3.2% rate, meaning that there was a tad more economic activity during the third quarter than previously thought. This would be bad news for the bond market and mortgage rates because strengthening economic growth makes bonds less appealing to investors that hurts bond prices and mortgage rates. Unless we see a much larger increase or a downward revision, I suspect this release will have a minimal impact on mortgage rates. It is the second of three monthly updates and analysts are looking more towards the current quarter's activity than what happened during late summer and early fall.
Next up is a congressional appearance by Fed Chair Janet Yellen at 10:00 AM ET. She will be updating a joint committee on the status of the economy. These types of appearances are widely watched and can have a significant influence on the financial and mortgage markets if they yield any surprises on the strength of the economy or changes to the Fed?s monetary policy plans. Her prepared statement may be released prior to her appearance, so a reaction may come during mid-morning trading.
Later tomorrow, the Federal Reserve will release their Beige Book at 2:00 PM ET. This report is named simply after the color of its cover and details economic conditions by Fed region. That information is relied upon heavily during the FOMC meetings when determining monetary policy, so its results can influence bond trading and mortgage rates if it shows any noticeable changes from the last update. More times than not though, this report will not influence the markets enough to cause intra-day changes to mortgage rates, but the potential to do so does exist.
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.