Friday, May 27th
Friday’s bond market has opened in positive territory, recovering a good part of yesterday’s afternoon losses. Stocks are looking to close the week on a positive note with the Dow up 251 points and the Nasdaq up 242 points. The bond market is currently up 6/32 (2.72%), but yesterday’s afternoon selling should cause a slight increase in this morning’s mortgage pricing if compared to Thursday’s early rates.
6/32
Bonds
30 yr - 2.72%
251
Dow
32,888
242
NASDAQ
11,983
Trailing 90 Days - National Average
Medium
Neutral
April's Personal Income and Outlays data was posted early this morning, revealing a 0.4% rise in income and a 0.9% jump in spending. The income reading fell a little short of expectations, making it good news since consumers had less money to spend than thought. However, the rise in spending exceeded forecasts, indicating consumers actually spent more than predicted, despite less than expected income. The two readings offset each other, allowing us to consider the data to be neutral for mortgage rates.
High
Neutral
The third headline number in the report was the 0.3% increase in the core Personal Consumption Expenditures (PCE) index that matched expectations. Fed Chairman Powell and friends heavily rely on this index as a key measure of inflation within the economy. The lack of a surprise in this inflation index, along with the mixed income and spending readings, have prevented bonds and mortgage rates from having a noticeable reaction to the report.
Medium
Positive
Late this morning, the University of Michigan announced a 58.4 reading in their revised Index of Consumer Sentiment for May. That was a downward revision from the preliminary estimate of 59.1 two weeks ago. The decline is a sign that surveyed consumers felt worse about their own financial and employment situations than they did earlier this month and are likely to spend less. Because consumer spending makes up over two thirds of the U.S. economy, the slower spending should restrict economic growth. This allows us to label the report as favorable for mortgage rates.
Low
Unknown
The bond market will close today at 2:00 PM ET ahead of Monday’s Memorial Day holiday, while stocks trade for a full day. All markets will be closed Monday for the holiday and reopen for regular trading hours Tuesday. Don’t be surprised to see a little pressure in bonds as we near the early close. This is common as investors look to protect themselves over the long weekend.
High
Unknown
Next week brings us plenty in terms of relevant economic releases that are likely to influence mortgage rates. The list includes the traditional first week of the month reports, such as the highly important ISM manufacturing index and monthly Employment report. Look for details on all of next week’s activities in Sunday evening’s weekly preview.
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... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.