April 26th, 2010 10:48 AM by Lehel S.
Monday's bond market has opened in positive territory despite a positive open for stocks. The Dow is starting the week off with a gain of 39 points while the Nasdaq is up 2 points. The bond market is currently up 6/32, which should improve this morning's mortgage rates by approximately .125 - .250 of a discount point over Friday's morning rates.
There is no relevant economic news scheduled for release today. If we see any changes to mortgage rates this afternoon, it will likely be the result of a sizable move in stocks. If the stock markets hold near their current levels, mortgage rates should follow suit.
The rest of the week is fairly active with four relevant economic reports in addition to another FOMC meeting and two fairly important Treasury auctions. All of the reports are considered to be at least moderately important while one particularly is considered very important to the markets and mortgage rates. This makes it likely that we will a fair amount of movement in mortgage pricing over the next several days.
The first report comes late tomorrow morning when the Consumer Confidence Index (CCI) for April will be released. This Conference Board index is a key indicator of future spending by consumers. The group surveys 5000 consumers from across the country about their personal financial situations. If sentiment is strong or rising, it is believed that consumers are more apt to make large purchases in the near future. However, if they are concerned about issues such as job security and investments, they will probably delay making large purchases. The latter is better for the bond market and mortgage rates because the expected slowdown in spending would keep inflation concerns to a minimum. But, a sizable increase could hurt the bond market, pushing mortgage rates higher Tuesday. It is expected to show a reading of 53.7, which would be a small increase from March's 52.5 reading.
This wee k's FOMC meeting will begin tomorrow and will adjourn Wednesday afternoon. It will likely adjourn with an announcement of no change to key short-term interest rates, but we may see some volatility in the markets following the 2:15 PM ET post-meeting statement. There appears to be more and more discussion about when the Fed will have to start raising key interest rates to prevent inflation from strengthening. If the statement gives any hint of when that may be, or there is a change in the regular canned portions of the statement, we could see a sizable change to mortgage rates Wednesday afternoon.
Overall, look for plenty of movement in the financial markets and mortgage some days this week, while others will probably be calm. Wednesday will likely be the most important day of the week with the FOMC adjournment, but we may see noticeable changes to rates Friday after the GDP is posted. If this week's reports reveal weaker than expected economic conditions, the bon d market should extend its rally and mortgage rates should fall for the week. However, I recommend taking a cautious approach towards rates if still floating an interest rate and closing in the near future.
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 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.