Friday, June 12th
Friday’s bond market has opened in negative territory following stronger than expected economic news and Iran-related headlines. Stocks are mixed with the Dow up 124 points and the Nasdaq down 2 points. The bond market is currently down 7/32 (4.49%), but a strong rally late yesterday should still allow this morning’s mortgage rates to be lower than Thursday’s early pricing by approximately .125 - .250 of a discount point.
7/32
Bonds
30 yr - 4.49%
124
Dow
50,973
2
NASDAQ
25,806
Trailing 90 Days - National Average
Medium
Neutral
Yesterday’s 30-year Treasury Bond auction was uneventful with the benchmarks showing a slightly softer demand than Wednesday’s 10-year Note sale. We are labeling the sale as neutral for mortgage rates since it had nothing to do with yesterday’s big rally in bonds. There was little reaction to the 1:00 PM ET results announcement, meaning it had no impact on mortgage pricing.
High
Positive
What caused yesterday afternoon’s rally was news from President Trump that a peace deal with Iran could be signed as early as this weekend. That caught the markets off-guard because the recent attacks back and forth led many to believe a deal was not close. It is worth noting that we have been down this road several times since the war started, then no deal is reached. Also noteworthy is that sources from Iran are publicly saying they have not agreed to any deal with the U.S. yet. Whether or not a deal is actually in place remains to be seen. However, the market reaction was real when news spread late yesterday. Oil prices dropped, stocks and bonds rallied and mortgage rates moved lower. If a peace deal does get signed this weekend, we should see another improvement in rates Monday morning.
High
Unknown
On the other hand, if this was more of false hope, we could see bonds give back more of yesterday’s rally Monday morning. We are already getting conflicting statements this morning from Iranian news outlets that denies there is an agreement and there is no signing planned for Sunday. So, we will see what happens this weekend.
Medium
Negative
Today’s sole relevant economic release came from the University of Michigan, who posted their preliminary Index of Consumer Sentiment for June at 10:00 AM ET. They announced a reading of 48.9 that was much higher than May’s 44.8 and well above forecasts of 46.0. This means surveyed consumers feel much better about their own financial situations than they did last month. Because rising sentiment usually translates into stronger consumer spending numbers that make up over two-thirds of the U.S. economy, this report is bad news for mortgage rates.
High
Unknown
Next week starts with minor reports being released Monday and Tuesday morning (Industrial Production and Housing Starts), leaving weekend Middle East news to be the strongest influence on the markets those days. Then things get real interesting Wednesday with the release of a major consumer spending report in the morning, followed by an afternoon of Fed events. This FOMC meeting includes revised economic projections and key rate predictions (dot plot). After the FOMC events, there is little set for the remaining days. Look for details on all of next week’s calendar 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... Float 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.