Thursday July 17 2025

Thursday's bond market has opened in positive territory despite the release of unfavorable economic data. Stocks are following suit with gains of 164 points in the Dow and 100 points in the Nasdaq. The bond market is currently up 6/32 (4.43%), which with yesterday's late gains should improve this morning's mortgage rates by approximately .125 of a discount point.

Yesterday's afternoon release of the Fed Beige Book didn't yield any major surprises but did support inflation concerns from tariffs. The 2:00 PM ET release indicated all twelve of the Fed districts reported tariff-related cost increases during May and early June, particularly raw material for the construction and manufacturing industries. It said that many companies have already passed on a portion of the increase to consumers while others are trying to hold off doing so. The general theme is that tariffs are fueling inflationary pressures that may become more apparent in this summer's inflation data. Overall economic activity appeared to increase slightly across the country, however, the outlook for the immediate future is still pessimistic. The bond market had already improved from morning levels before the report was posted, meaning even though some lenders issued an intraday improvement to mortgage pricing yesterday afternoon, it was due to the midday bond gains and not because of what the Beige Book showed.

This morning brought us two 8:30 AM ET economic releases, one of which is considered to be a major report. The more influential release was June's Retail Sales data that revealed a much stronger than expected 0.6% rise in consumer spending last month after a revised decline of 0.9% in May. A secondary reading that excludes more volatile food and energy costs also came in stronger than expected (up 0.5%). Forecasts had the headline sales number up 0.1% and sales without autos up 0.3%. These numbers are a sign that tariffs haven't necessarily had a negative impact on consumer spending habits, at least not yet. Since consumer spending makes up such a big portion of the U.S. economy, we have to label the report bad news for bonds and mortgage rates.

Last week's unemployment figures were also posted early this morning. They showed 221,000 new claims for jobless benefits were filed, down from the previous week's revised 228,000 initial filings. Analysts were expecting an increase in claims that would have been a sign of weaker employment growth. The decline means the data is bad news for rates also.

Tomorrow also has two pieces of data that we will be watching. June's Housing Starts report is set for release at 8:30 AM ET. It will give us an indication of housing sector strength and future mortgage credit demand. However, it doesn't cause much movement in mortgage rates unless it varies greatly from forecasts. This month's release is expected to show an increase in new home groundbreakings. The lower the number of starts, the better the news for the bond market even though the data will probably have little impact on mortgage pricing.

Closing out this week's economic calendar will be the University of Michigan's Index of Consumer Sentiment at 10:00 AM ET tomorrow. This index is released in a preliminary form each month and then followed up two weeks later with a final reading. The preliminary reading for July will be posted tomorrow and is expected to show an increase from June's final reading of 60.7. This would mean surveyed consumers are more optimistic about their own financial and employment situations this month than they were last month. It is believed that if consumer confidence in their own finances is rising, they are more apt to make a large purchase in the near future. Since consumer spending makes up over two-thirds of our economy, investors pay close attention to reports such as these. Accordingly, a decline in confidence would be good news for mortgage rates because it means many consumers are likely to delay making large purchases, limiting economic growth.

If I were considering financing/refinancing a home, I would....
Lock if my closing were taking place within 7 days...
Lock if my closing were taking place between 8 and 20 days...
Lock/A> if my closing were taking place between 21 and 60 days...
Lock if my closing were taking place over 60 days from now...
This is only my opinion of what I would do if I was financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.