March 11th, 2010 9:45 AM by Lehel S.
Thursday's bond market has opened relatively flat with no highly important economic news being posted. The stock markets have opened with minor losses. The Dow is currently down 21 points while the Nasdaq has slipped 2 points. The bond market is nearly unchanged from yesterday's close, but we will likely still see a slight improvement in this morning's rates due to strength late yesterday.
There were two pieces of economic news posted this morning, but both are considered low importance. January's Goods and Services Trade Balance reported a $37.3 billion trade deficit in January. This was much lower than expected however, the data is not important enough to directly affect bonds or mortgage rates. It does influence the value of the dollar versus other currencies, which in turn makes U.S. debt more or less attractive to foreign investors as the value of the dollar fluctuates. But it appears this morning's data has not influenced mortgage rates.
The Labor Department gave us last week's unemployment figures, saying that 462,000 new claims for unemployment benefits were filed last week. This was a decline from the previous week, but slightly higher than the 460,000 that was forecasted. But, since this report tracks only a week's worth of claims, it usually takes a wide variance to affect mortgage pricing.
We also have the 30-year Bond auction to watch for today. Results of the sale will be posted at 1:00 PM ET. Yesterday's 10-year Note auction actually went fairly well. The demand in the sale was much better than expected, but the rates that were bid for were higher than thought also. Overall, the sale can be considered pretty good, especially with the lackluster interest in recent auctions. This raises the possibility of seeing a successful 30-year Bond sale today and possible improvements in this afternoon's mortgage rates.
There are also two reports scheduled for release tomorrow morn ing. The first is February's Retail Sales data at 8:30 AM ET. This data is extremely important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, data that is related usually has a big impact on the financial markets. Tomorrow's report is expected to show a decline of approximately 0.2%. If we get a larger than expected drop, the bond market should thrive and mortgage should move lower. But an increase in sales could lead to higher mortgage rates tomorrow.
The second report of the day will be the University of Michigan's Index of Consumer Sentiment for March at 9:45 AM. This index gives us a measurement of consumer willingness to spend. If confidence is rising, then consumers are more apt to make large purchases. This helps fuel consumer spending and economic growth. A drop in confidence will probably hurt the stock markets and boost bond prices, leading to lower mortgage rates. If the index rises, indicating that confidence is rising and spending will likely rise, we may see mortgage rates move higher late tomorrow morning. It is expected to show a reading of 74.0, which is a slight increase from February's final reading.
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... 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.