February 17th, 2010 8:57 AM by Lehel S.
Tuesday's bond market has opened in negative territory due early gains in stocks. The stock markets are kicking-off the holiday shortened week with noticeable gains. The Dow is currently up 50 points while the Nasdaq has gained 7 points. The bond market is currently down 7/32, which will likely push this morning's mortgage rates higher by approximately .125 of a discount point over Friday's morning rates.
There are five economic reports worth watching this week that are likely to affect mortgage rates in addition to the minutes from the last FOMC meeting, but none are scheduled to be released today. Tomorrow brings us three of them, one of which is the week's least important. That is January's Housing Starts, which will be posted early tomorrow morning. It gives us an indication of housing sector strength and mortgage credit demand. It usually does not affect rates unless it varies greatly from forecasts. Current forecasts are calling for an increase in st arts of new housing.
January's Industrial Production data will be released mid-morning tomorrow and is considered to be moderately important for mortgage rates. It gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. Analysts are expecting to see a 0.8% increase in production from December to January. A smaller than expected rise in output would be good news and should push bond prices higher, slightly lowering mortgage rates tomorrow morning.
The minutes from last FOMC meeting will be released during afternoon hours. Traders will be looking for any indication of the Fed's next move regarding monetary policy. They will be released at 2:00 PM ET, therefore, any reaction will come during afternoon trading. This particular set of minutes could be interesting due to the wording of the last post-meeting statement. I suspect there was some debate amongst the FOMC members before releasing that sta tement. These minutes will likely clarify if there is a consensus amongst them or if there is disagreement about the Fed's actions or inactions. A consensus likely means a sooner change to key short-term rates. Accordingly, I am expecting some volatility in the markets after the minutes are released.
Overall, the most important day of the week will likely be Friday with the very important Consumer Price Index being released, but Thursday may also be active days for mortgage rates due to the Producer Price Index being posted. We also cannot forget about tomorrow's FOMC minutes as they may be a non-factor but also have the potential to heavily influence the markets and mortgage pricing. In other words, be prepared for an active week in the markets and mortgage rates.
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 m y 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.