April 27th, 2010 5:21 PM by Lehel S.
Tuesday's bond market has opened up sharply despite much stronger than expected economic news. Sizable stocks losses are also helping to boost bond prices this morning. The Dow is currently down 131 points while the Nasdaq is down 34 points. The bond market is currently up 20/32, which should improve this morning's mortgage rates by approximately .375 of a discount point. However, I would not be surprised to see further improvements to mortgage rates later today, especially of the stock markets extend their losses or the bond market moves higher than current levels.
The Conference Board gave us today's sole economic data late this morning. They reported that their Consumer Confidence Index (CCI) jumped to 57.9 this month, exceeding forecasts by several points. This means that surveyed consumers were much more optimistic about their own financial situations than many had thought. Normally, this data would have a negative impact on bond trading that would lead to higher mortgage rates. However, the stock selling and concerns about overseas economic situations has drawn a great deal of interest to bonds this morning.
There is no relevant economic data scheduled for release tomorrow, but we do have the FOMC meeting to be concerned with. The two-day meeting will adjourn at 2:15 PM ET tomorrow. There is a wide consensus that the Fed will leave key short-term interest rates unchanged at this meeting, but the post-meeting statement could create some fireworks if it gives any indication of when the Fed may start to raise rates. Market participants will also be looking for any concern about inflation and economic growth expectations. If the statement hints that there is concern about inflation, or if some of the common portions of the verbiage is changed, we could see the markets react heavily during afternoon hours. Whether or not that is good news for mortgage shoppers depends on how the content is construed by tra ders.
We also have the 5-year Treasury Note auction tomorrow. Results of the sale will be posted at 1:00 PM ET. There is a general feeling this morning that the sale may go fairly well. If this turns out to be the case, we may see more improvements to mortgage pricing late tomorrow, assuming that the FOMC meeting doesn't create a negative mood for bonds.
If I were considering financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float 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.