April 28th, 2010 2:38 PM by Lehel S.
Wednesday's bond market has opened in negative territory as investors digest yesterday's rally. The stock markets are showing minor gains after yesterday's sell-off that pushed the Dow down by over 200 points. The Dow is currently up 14 points while the Nasdaq has gained 3 points. The bond market is currently down 9/32, but we should still see a slight improvement in this morning's mortgage rates due to strength during afternoon trading yesterday.
This morning brings us no relevant economic data to influence the bond market. However, the FOMC meeting that began yesterday will adjourn at 2:15 PM ET today. 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 statem ent 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 traders.
The 5-year Treasury Note auction is also being held today. Results of the sale will be posted at 1:00 PM ET. There is a general feeling that the sale may go fairly well considering recent interest in bonds. If this turns out to be the case, we may see slight improvements to mortgage pricing later today, assuming that the FOMC meeting doesn't create a negative mood for bonds. But, I could see a lackluster demand in the sale leading to selling in bonds that would create upward revisions to mortgage rates.
There is no relevant data scheduled for release tomorrow except weekly unemployment figures from the Labor Department. We also have the 7-year Note sale tomorrow that may influence mortgage rates. There are three important reports being posted Friday morning, which could lead to sizable changes in rates.
Look for an update to this report shortly after the markets have an opportunity to react to the afternoon events.
If I were considering financing/refinancing a home, I would.... Lock 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.