November 12th, 2009 9:13 AM by Lehel S.
Thursday's bond market has opened fairly flat despite stock weakness. The stock markets are showing losses with the Dow down 52 points and the Nasdaq down 7 points. The bond market is nearly unchanged from Tuesday's close, so we will likely see little change in this morning's mortgage rates.
The Labor Department gave us last week's unemployment figures this morning. They reported that 502,000 new claims for unemployment benefits were filed last week, falling short of expectations. That is theoretically bad news for bonds, but since this data gives us only a week's worth of new claims its impact on mortgage rates is usually minimal. Accordingly, it has not influenced today's mortgage pricing.
We also have the 30-year Treasury Bond auction to watch today. It is considered to be less important to mortgage rates than Tuesday's 10-year sale was, but does have the potential to affect mortgage rates. Bond traders will be looking for a strong demand f rom investors, particularly international buyers. If there is an overwhelmingly strong interest in the sale, bonds may rally after the results are posted at 1:00 PM ET tomorrow. But a weak sale could lead to bond selling and higher mortgage rates later this afternoon.
The first monthly data of the week is tomorrow's release of September's Goods and Services Trade Balance report. It helps us measure the size of the U.S. trade deficit, but usually is not a major influence on bond trading or mortgage pricing. It does affect the value of the U.S. dollar, which makes U.S. securities more attractive to international investors when the dollar is strong. This is because the securities' proceeds are worth more when sold and converted to the investor's domestic currency. However, its results will not likely directly lead to changes in mortgage rates. It is expected to show a $31.8 billion trade deficit.
Tomorrow's second report is November's preliminary read ing of the University of Michigan's Index of Consumer Sentiment. This index measures consumer confidence, which gives us an indication of consumer willingness to spend. It is expected to show a reading of 71.0, up slightly from October's final reading of 70.6. That would be considered negative news for bonds because rising sentiment means consumers are more optimistic about their own financial situations and are more likely to make large purchases in the near future. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely.
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 cann ot be guaranteed to be in the best interest of all/any other borrowers.