January 26th, 2010 1:04 PM by Lehel S.
Tuesday's bond market has opened in positive territory despite stronger than expected results form this morning's important economic news and stock market gains. The major stock indexes have rebounded from early opening losses to move into positive ground. The Dow is currently up 58 points while the Nasdaq has gained 10 points. The bond market is currently up 4/32, which should improve this morning's mortgage rates by approximately .125 of a discount point.
The Conference Board released their Consumer Confidence Index (CCI) for January late this morning. They reported a reading of 55.9 that exceeded forecasts by over two points. This can be considered negative news for bonds because it indicates that consumers may be more willing to make large purchases in the near future. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely. But fortunately mortgage shoppers, the data seems to have had little influence on this morning's bond trading and mortgage pricing.
December's New Home Sales report will be posted late tomorrow morning. It is expected to show an increase in sales of newly constructed homes, but is not important enough to heavily influence mortgage pricing.
Also tomorrow is the 5-year Note auction. Results of the sale will be posted at 1:00 PM ET. This sale doesn't directly impact mortgage rates, but it will gives us a measurement of investor interest in U.S. securities. If the demand for the sale was strong, the broader bond market will likely react positively, making an improvement to mortgage rates possible. However, a poor demand could lead to bond selling and higher mortgage rates tomorrow afternoon.
Today begins the 2-day FOMC meeting that will adjourn at 2:15 PM ET Wednesday. It is expected to yield no change to short-term interest rates, but as is often the case, traders will be looking for any indication of the Fed's next m ove and when they may make it. I believe that there is little chance of indicating a possible rate hike in the near future, so I don't believe that this meeting will have the influence they usually do.
It appears that tomorrow afternoon will be more active than tomorrow morning for the bond market and mortgage rates. The morning data is not very important since it covers only approximately 15% of all homes sold in the U.S. The 5-year Treasury Note auction is not the most important of the sales that we track. But it does carry the potential to influence the bond market enough to impact mortgage pricing. And that takes us to the FOMC results that can cause more movement in the markets than both of the other events combined. So, I would not be surprised to see the most movement in mortgage rates to come during afternoon hours.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if m y 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.