January 6th, 2009 10:41 AM by Lehel Szucs
Tuesday's bond market has opened in negative territory again as long-term securities are falling out of favor with investors. The stock markets are showing gains with the Dow up 46 points and the Nasdaq up 20 points. The bond market is currently down 16/32, which will likely push this morning's mortgage rates higher by another .375 of a discount point.
The Commerce Department posted November's Factory Orders data this morning, reporting a drop of 4.6% in new orders. This data gives us a fairly important measurement of manufacturing sector strength and was expected to show a decline in orders of 2.6%. This means that the manufacturing sector was weaker than expected. However, even though this is good news for bonds, other pressures are making the results a non-factor in today's trading.
The 10-year TIPS Notes (inflation-indexed securities) will be auctioned today with its results being posted at 1:00 PM ET. If investor demand was strong, we sh ould see bonds strengthen during afternoon trading. However, a lackluster interest in the sale could cause bond prices to fall and mortgage rates to move higher following the announcement of the sale results.
Later this afternoon we will get to see the minutes from the last FOMC meeting. This will give market participants insight to the Fed's thinking and concerns regarding inflation and monetary policy. It may also help form opinions of the Fed's future moves toward interest rates, even though the Fed appears to be running out of options. It is one of those pieces of information that may cause a great deal of volatility in the markets or be a non-factor, depending on what the minutes show. They will be released at 2:00 PM ET, so they shouldn't affect the markets or mortgage rates until afternoon hours.
There is no relevant economic data scheduled for release tomorrow, so look for the stock markets to influence bond trading and possibly mortgage rates. I am expecting to see more pressure in bonds, until at least Friday when we will get December's Employment report.
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... Lock 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.
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