October 26th, 2009 11:57 PM by Lehel S.
Monday's bond market has opened well in negative ground following early stock gains. The stock markets are showing early strength with the Dow up 97 points and the Nasdaq up 27 points. This pushes the Dow above the important 10,000 benchmark level yet again, but its ability to hold that level has come up short during recent trading. It appears that until that level can hold, many analysts will remain skeptical of the recent stock rally. However, as stocks rise this morning, bonds are falling. The bond market is currently down 24/32, which will likely push this morning's mortgage rates higher by approximately .125 - .250 of a discount point over Friday's morning rates.
There is no relevant economic data scheduled for release today. The rest of the week brings us the release of seven relevant economic reports and two important Treasury auctions for the bond market to digest. Contributing to this morning's bond losses is the fact that there is $123 billion of Treasury debt being sold this week. That new supply of debt makes existing bonds and notes less attractive to investors. It is also common to see selling in bonds ahead of these auctions so market participants can prepare for the sales.
The first report of the week is one of the more important ones. October's Consumer Confidence Index (CCI) will be posted late tomorrow morning. This Conference Board index gives us a measurement of consumer willingness to spend. It is expected to show a small increase in confidence from last month's 53.1 reading, indicating that consumers are a little more likely to make large purchases in the near future than last month. As long as the reading doesn't exceed the forecasted 53.5, we will likely see the bond market react favorably to this report. This data is watched closely because consumer spending makes up two-thirds of the U.S. economy.
Overall, it will likely be an active week for the markets and mortgage rate s. I believe that the single most important day will probably end up being Thursday with the extremely important GDP release in the morning and the Treasury auction results during afternoon hours. However, tomorrow, Wednesday and Friday should also be active. Accordingly, I strongly recommend maintaining contact with your mortgage professional this week, especially if still floating an interest rate.
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... 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.