October 10th, 2008 12:19 PM by Lehel Szucs
Friday's bond market has opened down sharply again despite an extremely volatile morning in stocks. The stock markets initially opened with huge losses then recovered, but are now sliding again. The Dow is currently down 350 points after falling 700 points right after the morning bell. The Nasdaq is currently down 56 points, which is well off earlier lows and highs. The bond market is now down 29/32 despite the stock weakness. This will likely push this morning's mortgage rates higher by another .375 of a discount point.
This sounds like a broken record, but it still is the situation that we are seeing. Last night's major sell-off in the international markets has carried into this morning's trading. The markets still seem to be lost and unable to gain any solid traction and I am surprised that bonds are still taking a hit with the major stock indexes in a free-for-all downward spiral. But, until we see some stabilization, it is nearly impossible to mak e an educated guess of which direction the markets and mortgage rates will move.
August's Goods and Services Trade Balance was released this morning, revealing a $59.1 billion trade deficit. This nearly pegged forecasts, so as expected has had no impact on this morning's trading or mortgage rates.
Next week brings us the release of several important economic reports for the markets to digest. I would like to say this is good news for bonds as investors will have factual data to rely on and to influence trading. But, with the past two week's volatility and little data being posted this week, I am a little scared to think of what could happen to the markets if we get much weaker or stronger than expected results. I would like to think that weak data will be favorable for bonds, but with stocks and bonds moving in the same direction currently, that news may not turn into lower mortgage rates. We will see.
The fun starts in the middle of the week, but the latter days of the week bring us some very important data. There are two key inflation readings, retails sales data and the Fed Beige Book amongst others. Look for more details on next week's events in Sunday's weekly preview.
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... 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.
©Mortgage Commentary 2008