March 16th, 2010 10:37 PM by Lehel S.
Tuesday's bond market has opened in positive territory despite the same for stocks and slightly stronger than expected economic data. The stock markets are posting small gains with the Dow up 19 points and the Nasdaq up 8 points. The bond market is currently up 5/32, which should improve this morning's mortgage rates by approximately .125 of a discount point.
February's Housing Starts was this morning's only relevant economic data. The Commerce Department reported that construction starts of new homes fell 5.9% last month. The decline can be considered good news for the bond market, but analysts were expecting a slightly larger drop. Also, this data is not considered to be greatly important to the markets or mortgage rates, so its impact on today's trading has been minimal.
Today's FOMC meeting will adjourn at 2:00 PM ET. It is widely believed that the Fed will make no change to key short-term interest rates at this meeting, but the post-meetin g statement will be watched closely for any indication of when they will make a move. Generally speaking, the bond market wants to hear that inflation is not an immediate concern and that key rates will be kept at current levels for the near future. If the statement reassures traders that the Fed will not be raising rates anytime soon, we can expected the bond market to thrive and mortgage rates to move lower. However, any hint of a move sooner than later could lead to bond selling and higher mortgage rates this afternoon.
Look for an update to this report shortly after the markets have an opportunity to react to the meeting's results.
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... 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 opin ion 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.