February 11th, 2009 10:27 AM by Lehel Szucs
Wednesday's bond market has opened in positive territory again as traders continue to digest yesterday's activities on the economic stimulus and Fed bailout packages. The stock markets are rebounding from yesterday's sell off but have only been able to recover part this losses so far. The Dow is currently 55 points and the Nasdaq is up 8 points. The bond market is currently up 8/32, which should improve this morning's mortgage rates by approximately .250 of a discount point.
Today's only economic news was December's Goods and Services Trade Balance that showed a trade deficit of $39.9 billion in December. This was a larger than expected deficit with latest forecasts calling for it to stand at $35.7 billion. But it was still the lowest trade deficit since February 2003. Unfortunately, this data is not considered to be of high importance to the bond market and mortgage rates.
The second stage of this week's quarterly refunding or sales of govern ment debt is today with 10-year Treasury Notes being sold. The results of the sale will be posted at 1:00 PM ET. If it was met with strong demand, easing recent fears about the amount of debt being sold to fund the economic stimulus and Fed bailout programs, we should see bond prices move higher during afternoon trading. This may lead to a downward revision in mortgage rates. However, if the sale was met with a poor demand, we could see selling in bonds this afternoon that will lead to upward revisions to mortgage rates.
Tomorrow morning brings us the release of January's Retail Sales data. This report is very important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched quite closely. If tomorrow's report reveals weaker than expected sales, the bond market should thrive and mortgage rates will fall. However, a stronger reading than current forecast of a d ecline in sales of 0.3% may drive mortgage rates higher tomrorow.
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.
©Mortgage Commentary 2009