May 19th, 2008 11:18 AM by Lehel Szucs
Monday's bond market has opened fairly flat after this morning's economic news failed to show any significant surprises. The stock markets are showing early gains with the Dow up 35 points and the Nasdaq up 15 points. The bond market is currently down 1/32, which should keep this morning's mortgage rates at Friday's levels.
The Conference Board gave us this morning's data with the release of April's Leading Economic Indicators (LEI). They reported an increase of 0.1% compared to forecasts of no change, indicating that the economy may grow slightly more than was expected over the next few months. This data is considered to be moderately important and did not have much influence on today's mortgage rates.
April's Producer Price Index (PPI) will be released early tomorrow morning. This index helps us measure inflationary pressures at the producer level of the economy. If this report reveals weaker than expected readings, we should see the bond and stock markets rally. The overall index is expected to show an increase of 0.4%, while the core data that excludes food and energy prices is expected to rise 0.2%. A smaller than expected increase in the core data would be ideal for mortgage shoppers.
There is no relevant economic news scheduled for release Wednesday, but we will get to see the minutes from the last FOMC meeting. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation concerns in the economy. The goal is to form a guess about what the Fed's next move will be. The minutes will be released at 2:00 PM ET, so if there is a market reaction to them it will be evident during afternoon trading.
Overall, it may be an interesting week for mortgage rates. We could see little movement in rates if the stock markets remain calm and the week's data doesn't reveal any major surprises. Tuesday's PPI report is the single most important data o f the week, but the FOMC minutes may also lead to some volatility in the markets. Also worth noting is an early close in the bond market Friday afternoon ahead of the Memorial Day Holiday Monday. These early closes sometimes lead to additional volatility bond prices as investors prepare for the long weekend and trading thins with many traders starting the weekend early.
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.
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