May 21st, 2009 7:50 PM by Lehel Szucs
Thursday's bond market opened in positive territory but has since fallen well into negative ground. The stock markets are showing sizable losses with the Dow down 120 points and the Nasdaq down 34 points. The bond market is now down 26/32, but we will still see a slight improvement to this morning's mortgage rates as a result of gains late yesterday. However, I would not be surprised to see upward rate revisions if bonds continue to remain weak today.
The Labor Department reported this morning that 631,000 new claims for unemployment benefits were filed last week. This was a little higher than expected, but not nearly enough of a difference to influence this morning's mortgage rates.
April's Leading Economic Indicators (LEI) was released late this morning, revealing an increase of 1.0%. This was a larger increase than was expected and indicates that the economy may grow at a decent pace of the next three to six months. But, this is only one ind icator and does not mean that the economy is going to rebound quickly. Still, the news is considered negative for bonds and mortgage rates.
The turnaround in bonds came after the Fed said that $100 billion in new debt will be sold in the immediate future. This was more than expected and makes current Treasury securities less appealing to investors. That has led to selling during late morning trading as traders prepare for those sales.
There is no relevant data scheduled for release tomorrow, but the bond market will close at 2:00 PM ET ahead of the Memorial Day Holiday Monday. All the financial markets will be closed Monday and will reopen Tuesday morning. These early closes sometimes lead to additional volatility in 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... 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.
©Mortgage Commentary 2009