March 22nd, 2010 12:12 PM by Lehel S.
Monday's bond market has opened in positive territory as stocks react negatively to the healthcare bill and concerns about Greece again. The stock markets have opened slightly in negative ground with the Dow currently down 14 points and the Nasdaq down 3 points. The bond market is currently up 6/32, which will likely improve this morning's mortgage rates by approximately .125 of a discount point.
There is no relevant economic data being posted today. The rest of the week brings us the release of five monthly and quarterly reports for the bond market to digest along with two relevant Treasury auctions, but today's bond trading will likely be left up to the stock markets. If the major stock indexes fall from current levels, we should see more funds shifted into bonds and mortgage rates move lower later today.
The first data is February's Existing Home Sales from the National Association of Realtors at 10:00 AM ET tomorrow. It will give us a measu rement of housing sector strength and mortgage credit demand, but is usually considered to be of low importance to the financial markets. Its' sister report- February's New Home Sales, will be posted Wednesday morning. Since it is the day's only data, it may influence bond trading enough to cause a slight change in mortgage rates, but it will take a large variance from forecasts for it to heavily influence rates. Current forecasts have tomorrow's report showing a small decline in sales and Wednesday's data showing a minor increase in sales.
Wednesday's important data comes from the Commerce Department, who will post February's Durable Goods Orders. This report gives us a measurement of manufacturing sector strength by tracking new orders for big-ticket items, or products that are expected to last three or more years. This data is known to be volatile from month to month but is still considered to be of high importance. Analysts are expecting it to show an increase in new orders of approximately 0.5%. A larger increase would be considered negative for bonds as it would indicate economic strength and could lead to higher mortgage rates Wednesday morning.
Overall, it is difficult to label one particular day as the most important of the week. The single most important report will likely be the Durable Goods Orders, but none of the week's data has the potential to be a major market mover. If the stock markets move lower, we should see gains in bonds and improvements in mortgage rates. But, if stocks move higher, pressure in bonds is possible, leading to higher mortgage pricing. I suspect that this week will be a little calmer for mortgage rates than the past couple weeks have been, but I still recommend proceeding with caution if you are still floating an interest rate.
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 p lace 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.