This week’s FOMC meeting has adjourned with another quarter-point increase to key short-term interest rates. The financial markets has responded quite favorably to the news with the Dow now up 181 points and the Nasdaq up 45 points. The bond market has also improved from earlier levels, currently standing up 10/32. This wil l likely improve this afternoon’s mortgage rates by approximately .125 of a discount point.

The move was the 17th consecutive rate hike, but was expected. In the post-meeting statement, the Fed indicated that economic activity seems be slowing, but that inflation risks remain. The slowing economy is great news for the bond market, but the inflation news still is a concern. Still, the markets have had a positive reaction the news, which will hopefully lead to higher bond prices and lower mortgage rates in the immediate future.

Today’s economic data didn’t reveal any major surprises. The final reading to the1st Quarter GDP was posted early this morning, showing that the economy grew at a 5.6% annual pace during the first three months of the year. This was higher than the previously announced 5.3% expected, but did match forecasts. The Labor Department reported that 313,000 new claims were filed for unemployment benefits last week. This was slightly higher t han expected, but didn’t affected bonds much.

There are two reports due to be posted tomorrow morning. The first is the release of May’s Personal Income and Outlays data. This report gives us an indication of consumer ability to spend and current spending activity. Analysts are expecting to see an increase of 0.2% in income and a 0.4% rise in the spending portion of the report. Smaller than expected increases should be good news for the bond market and mortgage rates.

The second report of the day is the University of Michigan’s Consumer Sentiment Index’s final reading for June. Unless we see a significant change to the preliminary reading of 82.4, I expect this data to be a non-factor in the market.

If I were considering financing/refinancing a home, I would…. Float if my closing was taking place within 7 days… Float 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 cl osing 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.

a la mode