Friday’s bond market has opened in negative territory, giving back some of yesterday afternoon’s surprise rally. Stocks are showing gains with the Dow up 153 points and the Nasdaq up 85 points. The bond market is currently down 7/32 (5.26%), but a late rally yesterday is still going to allow this morning’s mortgage rates to be approximately .250 of a discount point lower than Thursday’s early pricing. The change you see this morning depends on the size of the downward revision(s) you received yesterday afternoon.

Yesterday’s 30-year Treasury Bond auction went equally well as Wednesday’s 10-year Note sale by drawing a strong demand from investors. Bonds had already started their rally before the auction results were posted at 1:00 PM ET, but we did see another move lower in yields after they were announced. While the auction obviously is not the primary reason for yesterday’s late rally, it did help keep the gains instead of giving traders a reason to sell. Mortgage rates followed suit with an intraday improvement because they are based on long-term debt and the strong demand was a sign investors will purchase mortgage bonds also.

The University of Michigan closed out this week’s light calendar with the release of their October Index of Consumer Sentiment at 10:00 AM ET this morning. They announced a reading of 46.3 that was a decline from September’s 48.1 and lower than forecasts. Waning confidence is favorable for bonds and mortgage rates because it means consumers are likely to spend less, restricting economic growth. Consumer spending makes up over two-thirds of the U.S. economy and bonds tend to be more appealing to investors when economic activity is weaker. Unfortunately, the good news is being ignored by traders this morning, preventing a positive impact on mortgage rates.

The markets will be closed Monday in recognition of the Columbus/Indigenous Peoples’ Day holiday. The rest of the week has a handful of economic reports scheduled for release, including three that are considered to be highly important to the financial and mortgage markets. Over Wednesday and Thursday morning we will get September’s Consumer and Producer Price Indexes (CPI & PPI) along with a key measurement of consumer spending. Next week’s calendar opens with a moderately important housing report Tuesday and ends with the release of a minor manufacturing report Friday morning. We will also be watching for Middle East headlines, oil prices and other factors that may affect mortgage rates. 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.