Today's Mortgage Rates Improves On Better Than Expected News 1-30-2018
By James Brooks
The bond market is down 2/32 (2.70%),However, gains late yesterday should allow this morning?s mortgage pricing to be a little better than yesterday?s early rates.
January's Consumer Confidence Index (CCI) was be posted late this morning. The Conference Board announced a reading of 125.4 that exceeded forecasts of 124.0. That means surveyed consumers felt better about their own financial situations than expected. They were also more optimistic than they were last month as this was an increase from December?s revised 123.1 reading. Because strengthening confidence usually translates into higher levels of consumer spending that fuels economic growth, this is negative news for bonds and mortgage rates.
Tomorrow has two early reports, followed by the first FOMC meeting adjournment of the year. The first economic report of the day will be the ADP Employment report at 8:15 AM ET. This release has the potential to cause some movement in the markets if it shows much stronger or weaker numbers. It tracks changes in private-sector jobs, using the company's clients that use them for payroll processing as a base. While it does draw attention, it is my opinion that it is overrated and also is not a true reflection of the broader employment picture. It also is not accurate in predicting results of the monthly government report that follows a couple days later. Still, because we see a reaction to its results, it is included in this week's calendar. Analysts are expecting to see 190,000 new jobs. Good news would be a much smaller number of jobs.
Also early tomorrow will be the release of the 4th Quarter Employment Cost Index (ECI) at 8:30 AM ET. This index measures employer costs for employee wages and benefits, giving us an indication of the threat of wage inflation. If wages are rising, consumers have more money to spend and businesses usually need to charge more for their products and services. The report is considered moderately important and usually has more of an impact on the bond market than the stock markets. Current forecasts are showing an increase of 0.6%. A lower than expected reading would be favorable to bonds and mortgage rates, but unless we see a large variance from forecasts, I am not expecting this report to have much of an influence on rates.
The FOMC meeting that began today will adjourn at 2:00 PM ET tomorrow. This is Janet Yellen?s last meeting as chairperson. It is widely expected that they will not follow up last month's bump to key short-term interest rates with another move to key rates tomorrow. There is just a small chance that they will make another rate hike, so we need to be prepared in case it does happen. It is more likely that the post-meeting statement will be the cause of afternoon volatility. Traders are looking for hints as to when the next rate bump is likely to come. This meeting will not include economic projections or a Fed press conference.
It is also worth noting tonight?s State of the Union address may influence trading tomorrow. Depending on what is said, these speeches often come into play the following morning because they outline the President?s plans and intentions for the upcoming year. Talk of budget issues, spending and other hot-topics can have an impact on tomorrow?s trading in stocks and bonds. Therefore, it may also influence 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... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now.