November 11th, 2009 10:49 AM by Lehel S.
Tuesday's bond market has opened in positive territory despite early gains in stocks. The stock markets are extending yesterday's rally, but by a much less margin. The Dow is currently up 27 points while the Nasdaq has gained 4 points. The bond market is currently up 9/32, which should improve this morning's mortgage rates by approximately .125 of a discount point.
There is no relevant economic data scheduled to be posted today. However, we do have the 10-year Treasury Note sale to be concerned with. The markets will be gauging investor interest in this sale, particularly from international buyers. If the sale is met with a decent demand from investors, indicating a strong appetite for U.S. debt, we may see bond prices rise during afternoon trading. If this is the case, mortgage rates will likely revise lower. But, a weak interest in the auction could lead to higher mortgage pricing later today. Results of the sale will be posted at 1:00 PM ET.
I find it interesting that the bond market has had little reaction to the stock market rally. This could mean that bond traders are not impressed and not concerned about further increases. This bodes well for mortgage rates because if stock gains are not a concern, or better yet stocks pull back, we could see a sizable bond rally. There are some analysts who feel the stock rally is running out of steam. If this is true, we may by in store for a sizable rally in bonds and improvements to mortgage rates in the immediate future.
The bond market is closed tomorrow in observance of the Veterans Day holiday, however the stock markets will be open. There is no early close scheduled for today that precedes some holidays, so I don't expect the holiday to affect today's trading. Many lenders will also be closed tomorrow, but those that will be open will probably not issue new rates until Thursday morning.
The only factual economic data scheduled for rele ase Thursday are weekly unemployment figures from the Labor Department. They are expected to show that 510,000 new claims for benefits were filed last week. This would be a slight change from the previous week's total, but since this data tracks a only week's worth of new claims it likely will not impact bond trading enough to affect mortgage rates. It will require a wide variance between forecasts and the actual number of new claims to see mortgage rates react to this data.
The week's only two economic reports are scheduled to be posted Friday morning. Neither of them are considered to be highly important, so we should not expect a noticeable movement in mortgage rates due to their results. Since it is the week's only monthly data, we may see movement in the markets after their results are posted, but I don't believe it will be enough to lead to a significant change in rates.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float 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.