Rate Lock Advisory

Friday, April 11th

Friday’s bond market has opened sharply weaker despite clearly bond-friendly economic news. Stocks are showing early gains of 95 points in the Dow and 105 points in the Nasdaq, but who knows if they will hold or not. The bond market is currently down 22/32 (4.51%) after a sizable sell-off late yesterday. Due to those losses, this morning’s mortgage rates should be considerably higher than Thursday’s early pricing. The change in rates between midday yesterday and this morning should be somewhere in the neighborhood of .875 – 1.125 of a discount point.

22/32

Bonds

30 yr - 4.51%

95

Dow

39,689

105

NASDAQ

16,492

Mortgage Rate Trend

Trailing 90 Days - National Average

  • 30 Year Fixed
  • 15 Year Fixed
  • 5/1 ARM

Indexes Affecting Rate Lock

Medium

Positive

Treasury Auctions (5,7,10,20,30 year)

Yesterday’s 30-year Treasury Bond auction followed suit of Wednesday’s 10-year Note sale by drawing a strong demand from investors. We saw a good reaction to the 1:00 PM ET results announcement with bonds improving immediately after. However, bond prices were already well off of their morning highs before results were posted and shortly after, they resumed the negative momentum that led to many lenders making an upward revision to mortgage pricing. In other words, the auction itself was good news for rates by theory, but didn’t carry enough importance to offset the unfavorable environment in the market.

High

Positive

Producer Price Index (PPI)

This morning’s release of March’s Producer Price Index (PPI) revealed wholesale inflation was also much softer than expected, just as we saw with yesterday’s consumer inflation data. It showed a 0.4% drop in March’s overall PPI and a 0.1% decline in the more important core reading that excludes volatile food and energy costs. Analysts were expecting to see increases of 0.2% and 0.3% respectively. As with the CPI, even better news came in the year-over-year numbers. The overall reading fell from February’s 3.4% to 2.7% last month and core data went from a 3.6% annual pace down to 3.3%. These numbers verify inflationary pressures were falling before the tariff issue arose. It appears that traders are much more concerned about what the future will bring after the impact of the tariff war starts to appear in the inflation data than they are of looking backward.

Medium

Positive

Univ of Mich Consumer Sentiment (Prelim)

More favorable economic data came in the University of Michigan's Index of Consumer Sentiment for April at 10:00 AM ET. They announced a reading of 50.8 that was down considerably from March’s 57.0 and much lower than forecasts. This was the lowest reading of consumer confidence in their own financial situations since June 2022 and the second lowest on record, which goes all the way back to 1952. Waning confidence is relevant because as consumers grow more worried about their own financial situations, they are likely to cut back on spending and delay large purchases. Since consumer spending makes up over two-thirds of the U.S. economy, this is a sign the economy may be weakening in the near future. Unfortunately, even though this report is very good news for bonds by theory, it is being ignored as traders are focused on other factors.

High

Unknown

Retail Sales

Next week starts off fairly light with just a couple of Fed-member speeches scheduled Monday and Tuesday. Economic reports begin Wednesday morning with the release of the highly important Retail Sales report that tracks consumer spending. There is also another Treasury auction and speaking engagement by Fed Chairman Powell midweek that will draw plenty of attention. We are also heading into corporate earnings season that is much more relevant to stocks than bonds, but as we saw recently, stocks do sometimes influence bond trading and mortgage rates. It will be a holiday-shortened week due to the Good Friday holiday. Look for details on all of next week’s activities in Sunday evening’s weekly preview.

Float / Lock Recommendation

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.