St. Louis Real Estate Blog

September 11, 2008 Daily Rate Lock Advisory

September 11th, 2008 12:11 PM by Melanie Mitchell - Team Lead/Listing Specialist


Thursday's bond market has bounced around in the wake of extremely volatile stock trading this morning. The stock markets are showing losses at the moment, but are currently significantly higher than earlier lows. The Dow is now standing down 19 points after falling as much as 170 points earlier. The Nasdaq is currently up 6 points but was as low as down 37 points before rebounding. The recovery in stocks is pressuring bonds and preventing much of an improvement in this morning's mortgage rates. The bond market is currently unchanged from yesterday's close, which should keep this morning's mortgage rates at yesterday's levels.

Today's only monthly economic data was July's Goods and Services Trade Balance report.

It showed that the U.S. trade deficit rose to $62.2 billion last month when it was expected to reveal a deficit of approximately $58.0 billion. Fortunately though, this data is not considered to be of high importance to the markets.

The Labor Department released weekly unemployment figures this morning, saying that 445,000 new claims were filed. This was a drop of 6,000, which was very close to forecasts and has not had an impact on the markets or mortgage rates.

Tomorrow morning brings us the release of three pieces of relevant data. The first is the release of August's Retail Sales report. It will give us a measurement of consumer spending, which is very important to the markets because consumer spending makes up two-thirds of the U.S. economy. Current forecasts are calling for a 0.3% increase in sales. If we see a higher level of spending than what is forecasted, the bond market will most likely fall and mortgage rates will rise. However, a weaker than expected reading could push bond prices higher and mortgage rates lower tomorrow morning.

The second important piece of data is the release of August's Producer Price Index (PPI). This report will give us a very importa nt measurement of inflationary pressures at the producer level of the economy. There are two readings that analysts follow in this release. They are the overall index and the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices. Analysts are currently calling for a 0.5% decline in the overall index, and a rise of 0.2% in the core data. Stronger than expected readings could fuel inflation concerns in the bond market and lead to an increase in mortgage rates Friday morning.

The last report of the week comes from the University of Michigan late tomorrow morning. Their consumer sentiment index will give us an indication of consumer confidence, which hints at consumers' willingness to spend. If confidence is rising, consumers are more apt to make large purchases. But, if they are growing more concerned of their personal financial situations, they probably will delay making that large purchase. This influences future consumer spending data and can impact the financial markets. It is expected to show a reading of 64.0.

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.

©Mortgage Commentary 2008
Posted in:General
Posted by Melanie Mitchell - Team Lead/Listing Specialist on September 11th, 2008 12:11 PM


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