Tuesday, April 30th
Tuesday’s bond market has opened in negative territory following mixed economic data. Stocks are showing losses of 188 points in the Dow and 23 points in the Nasdaq. The bond market is currently down 9/32 (4.64%), which should cause an increase of approximately .250 of a discount point in this morning’s mortgage rates.
9/32
Bonds
30 yr - 4.64%
188
Dow
38,197
23
NASDAQ
15,959
Trailing 90 Days - National Average
Medium
Negative
This morning’s first economic release was the 1st Quarter Employment Cost Index (ECI) at 8:30 AM ET. It showed that employer costs for wages and benefits rose more than expected during the first three months of the year. The ECI rose 1.2% when forecasts had it at 1.0%. The larger increase is a sign of wage inflation that fuels inflation across the economy. Therefore, we have to label the report bad news for bonds and mortgage rates.
Medium
Positive
April's Consumer Confidence Index (CCI) was posted at 10:00 AM ET. The Conference Board announced a reading of 97.0 that was much lower than the expected 103.7 and a large drop from March’s revised 103.1. Waning confidence usually translates into weaker consumer spending numbers that make up such a large portion of the U.S. economy. Therefore, we can consider this data to be favorable for bonds and mortgage rates. Unfortunately, traders seem to be more focused on the inflation-related news than this confidence reading.
Medium
Unknown
Tomorrow is going to be quite interesting for the markets with such a busy day of scheduled events that may affect mortgage rates. They start with April’s ADP Employment report at 8:15 AM ET that tracks changes in private-sector jobs, using their clients that use them for payroll processing as a base. Analysts are expecting it to show that approximately 184,000 private sector payrolls were added to the economy last month. A smaller number would be good news for rates.
High
Unknown
Next will be April’s manufacturing index from the Institute for Supply Management (ISM) at 10:00 AM ET. This highly important report gives us insight into manufacturer sentiment on business conditions. A reading above 50 means that more surveyed trade executives felt business improved during the month than those who felt it had worsened. It broke above that threshold last month for the first time since September 2022. Analysts are expecting to see a reading of 50.1, down slightly from March's 50.3. Bond traders would prefer to see a decline from March's level, which would signal the manufacturing sector weakened during the month.
High
Unknown
The Fed events all take place midafternoon tomorrow, beginning with the 2:00 PM ET FOMC meeting adjournment. The overwhelming consensus is that the Fed will leave key short-term interest rates at their current levels since the downward trend in inflation seems to have slowed or stalled.
High
Unknown
This meeting does not include revised economic projections, but there is a press conference with Chairman Powell at 2:30 PM. It wasn’t too long ago that it was this meeting that was predicted to finally yield a rate cut, which was pushed further and further later in the year as inflation numbers appeared stronger than expected. There is now some chatter that another rate hike may actually come before that first reduction if inflation doesn’t start moving lower again. Traders will be looking closely at their words about future moves. Reassurances that rate cuts will come this year would be favorable for 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... 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.