January 11th, 2010 9:49 AM by Lehel S.
Monday's bond market has opened in positive territory following a calm open in stocks. The major stock indexes are showing minor losses with the Dow down 5 points and the Nasdaq down 10 points. The bond market is currently up 6/32, which will likely improve this morning's mortgage rates by approximately .125 of a discount point over Friday's morning rates.
There is no relevant economic news scheduled for release today. It is the only day of the week that does not have some type of data or relevant events scheduled. The rest of the week brings us the release of six pieces of economic data to digest along with two important Treasury auctions. The most important data is being released the latter part of the week, so we will likely see the most movement in rates then.
The first economic data is also the week's least important release. November's Goods and Services Trade Balance will be posted early tomorrow morning. It measures the size of the U.S . trade deficit and is expected to show a $34.5 billion deficit. This data usually does not directly affect mortgage rates, but it does influence the value of the U.S. dollar versus other currencies. A stronger dollar makes U.S. securities more attractive to international investors because they are worth more when sold and converted to the investor's domestic currency. But unless we see a significant variance from forecasts, I don't believe this data will lead to a change in mortgage rates tomorrow.
The Federal Reserve will post its Fed Beige Book report at 2:00 PM ET Wednesday. This report, which is named simply after the color of its cover, details economic conditions throughout the U.S. by region. Since the Fed relies heavily on it during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any surprises.
The two important Treasury auctions come Wednesday and Thursday when 10-year Notes and 30-year Bonds are sold. The 10-year sale is the more important one as it will give us an indication for demand of mortgage-related securities. If the sales are met with a strong demand from investors, we should see the bond market move higher during afternoon trading the days of the auctions. But a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader bond selling. The selling in bonds would result in upward revisions to mortgage rates.
Overall, Thursday or Friday will probably end up being the most important day of the week. The single most important report is Friday's CPI, but Thursday's Retail Sales report is a close second. Both are considered to be of high importance and can heavily influence the markets. Therefore, I strongly recommend maintaining contact with your mortgage professional this week, especially the latter part if still floating an in terest rate.
If I were considering financing/refinancing a home, I would.... Lock 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 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.