December 10th, 2008 12:20 PM by Lehel Szucs
Wednesday's bond market has opened in negative territory following a strong opening in stocks. The stock markets are rebounding from yesterday's sell-off with the Dow currently up 120 points and the Nasdaq up 26 points. The bond market is currently down 17/32, but we will likely still see an improvement in this morning's mortgage rates of approximately .250 - .375 of a discount point due to strength in bonds late yesterday.
There is no relevant economic news scheduled for release today. October's Goods and Services Trade Balance report will be posted early tomorrow morning along with weekly unemployment figures. The Trade Balance report gives the size of the U.S. trade deficit, but it is the week's least important release. It is expected to show a $53.5 billion trade deficit. Unless it varies greatly from forecasts, I don't expect it to affect mortgage pricing.
The Labor Department will post last week's unemployment claims figures tomorrow also. They are expected to show that 525,000 new claims for benefits were filed last week. While a larger number would be good news for bonds, the truth is that this data is not very influential to bonds and mortgage rates because it covers only a week's worth of claims. But, with no highly important data scheduled for release, if it varies much from forecasts we may see bonds react enough to slightly impact mortgage rates.
Also, there is a 10-year Treasury Note auction tomorrow that may hurt or help boost bond prices, depending on how strong of a demand there is in the sale. Results will be posted at 1:00 PM ET. If there was a strong demand for the sale, we may see bonds move higher and mortgage rates revise lower during afternoon trading. However, a lackluster interest could lead to higher mortgage pricing.
Friday morning brings us the release of a couple of important reports. The two most important are November's Retail Sales and Producer Price Index (PPI) reports. The sales report tracks consumer spending while the PPI gives us an important measurement of inflationary pressures at the producer level of the economy. Both can lead to large swings in the markets and mortgage pricing. The third report of the day will be December's preliminary reading to the University of Michigan's Index of Consumer Sentiment, but it less important than the first two.
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... Lock 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.
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