October 6th, 2008 9:47 AM by Lehel Szucs
This week brings us only one monthly economic report for the markets to digest and it is not considered to be of high importance. This means that the week will be left mostly up to the stock markets and other influences since there is a lack of factual data for bonds to trade on. In addition to the one report, we will also get the minutes from the last FOMC meeting that can also cause movement in rates if it reveals any surprises.
The first news of the week comes Tuesday afternoon when the Fed will release the minutes to the last FOMC meeting. These may be a major mover of the markets or could be a non-factor, depending on what they say. The key will be concerns over inflation and the Fed's next move. If the Fed members were concerned about inflationary pressures, we may see the bond market move lower and mortgage rates higher Tuesday afternoon. However, if they indicate that inflation is easing and that a rate increase is not likely in the coming months, we s hould see the bond market rise and mortgage rates drop during afternoon trading.
The only factual economic data of the week will be posted Friday morning. August's Goods and Services Trade Balance will be released that day, but is not likely to cause much of a change in mortgage pricing. It will give us the size of the U.S. trade deficit, but usually does not lead to significant movement in bond prices or mortgage rates.
Also worth noting are two public speaking engagements by Fed Chairman Bernanke Monday and Tuesday. I don't expect them to have much of an impact on the markets, but his words always have the potential to create a reaction in trading. He will be speaking at the annual meeting of the National Association for Business Economics, but I don't see this to likely affect mortgage rates.
Overall, I suspect this is going to be fairly quiet week for the bond market and mortgage rates, especially compared to last week. For the most p art, I believe the week will be left to the stock markets and the Fed minutes. The most important day of the week is likely Tuesday with the Fed minutes, but any day of significant stock volatility may make that particular day the most eventful. The bond market will close early Friday in observance of Monday's Columbus Day holiday, but it will also likely be a non-event to the markets.
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.
©Mortgage Commentary 2008