April 15th, 2009 8:27 AM by Lehel Szucs
Wednesday's bond market has opened flat following an uneventful open in stocks and mixed results in this morning's economic data. The stock markets are mixed with the Dow up 19 points and the Nasdaq down 9 points. The bond market is currently unchanged from yesterday's close, which will keep this morning's mortgage rates close to yesterday's levels.
For what could have been a very active morning in the markets and mortgage rates, we are seeing little movement. The Labor Department gave us the very important Consumer Price Index (CPI) for March that revealed a 0.1% decline in the overall reading but a 0.2% increase in the core data. The overall reading was weaker than expected, however, the more important core data was expected to rise only 0.1%. This indicates that prices at the consumer level of the economy rose slightly more than thought when excluding volatile food and energy costs. This can be considered negative news for bonds and mortgage rates, bu t the market does not seem to be phased by its results.
The second report of the morning was March's Industrial Production data. It showed a much larger slowdown in production than analysts had thought. Today's report was expected to show a 0.9% decline in industrial output, but actually revealed a 1.5% drop. This means that production at factories, mines and utilities slowed much more than many had predicted. Since slowing manufacturing activity indicates a weaker economy, this news is considered favorable to bonds and mortgage rates.
There is a third report scheduled for release today. The Federal Reserve will post its Fed Beige Book report at 2:00 PM ET. This report, which is named simply after the color of its cover, details economic conditions throughout the U.S. by region. Since the Fed relies heavily on it during their FOMC meetings, its results can have an impact on the financial markets and mortgage rates if it reveals any surprises.
March's Housing Starts report is tomorrow's only monthly report, but it will most likely be a non-factor in the markets and mortgage rates. It gives us a measurement of housing sector strength and mortgage credit demand, however, usually doesn't cause much movement in mortgage pricing unless it varies greatly from forecasts. It is this week's least important report and is expected to show a decline in starts of new homes.
We also will see last week's unemployment figures from the Labor Department tomorrow morning. This data usually has little influence on mortgage rates also unless there is a wide variance between forecasts and its actual numbers. It is expected to show that 658,000 new claims for benefits were filed last week. The larger the total of new claims, the better the news for bonds and mortgage pricing.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float if my clo sing 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