December 28th, 2009 11:08 AM by Lehel S.
This week brings us the release of only one piece of economic data that is considered important to mortgage rates in addition to two important Treasury auctions. It is another holiday-shortened week with the New Years Day holiday Friday, so the data may have a heavier impact on trading than usual if it varies from forecasts by much. The bond market will close early Thursday and remain closed Friday as it did last week. With that type of schedule, many traders will not be working the latter part of the week, so any unexpected news or data may lead to a larger than usual reaction in the markets.
There is no relevant news scheduled for release tomorrow. Look for any significant changes in stocks to drive bond trading and mortgage rates. If the major stock indexes remain fairly calm, it is possible that bond prices and mortgage rates may follow suit.
The first important release comes late Tuesday morning when the Conference Board will post its Consumer Confidence Index (CCI) for December. This is a pretty important release because it measures consumer willingness to spend. If consumers are more confident in their personal financial situations, they are more apt to make large purchases. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely by market participants and can have a significant influence on mortgage rate direction. Current forecasts are calling for an increase in confidence from November's reading of 49.5. Analysts are expecting Tuesday's release to show a reading of 53.0. The lower the reading, the better the news for bonds and mortgage pricing.
This week also has Treasury auctions scheduled the first three days. The two that are most likely to influence mortgage rates are Tuesday's 5-year and Wednesday's 7-year Note sales. If those sales are met with a strong demand, particularly Wednesday's auction, bond prices may rise during afternoon trading. This could lead to improvements to mortgage rates shortly after the results of the sales are posted at 1:00 PM ET each day. But a lackluster investor demand may create bond selling and upward revisions to mortgage rates.
The bond market will close at 2:00 PM ET Thursday and all of the U.S. financial markets will be closed Friday in observance of the New Year's Day holiday. They will reopen for regular hours next Monday morning.
Overall, as we saw last week, a shortened trading week by no means translates into calmness. The thin trading often creates larger than usual fluctuations in the major indexes. Despite last week's shortened schedule, we saw plenty of movement in mortgage rates. This week likely will be the same as investors look to make year-end adjustments to their portfolios. Accordingly, I recommend keeping in contact with your mortgage professional if still floating an interest rate and closing in the immediate future.
If I were c onsidering 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.