May 27th, 2009 7:28 AM by Lehel Szucs
Tuesday's bond market opened in positive territory but has since slipped into negative ground after today's only relevant economic data showed a much higher than expected reading. The stock markets are rallying with the Dow up 170 points and the Nasdaq up 46 points. The bond market is currently down 3/32, which will likely push this morning's mortgage rates higher by approximately .125 of a discount point.
The Conference Board gave us the news that is pressuring bonds and boosting stocks. They said late this morning that their Consumer Confidence Index (CCI) spiked to 54.9 this month, greatly exceeding forecasts. Analysts were expecting to see a reading of approximately 42.0, meaning that consumers were much more optimistic about their own financial situations than many had thought. This is negative news for bonds because rising confidence usually translates into higher level of consumer spending, which fuels the economy.
The National Associati on of Realtors will give us the Existing Home Sales report late tomorrow morning. This data tracks resales of homes in the U.S., giving us a measurement of housing sector strength. However, it is not considered to be of much importance to the bond market unless it varies greatly from forecasts. Current forecasts are calling for a small increase in sales between March and April.
Overall, I think we have a busy week ahead of us. The big reports of the week were today's CCI and Thursday's Durable Goods Orders data. If Friday's GDP revision varies greatly from forecasts, it can also lead to sizable changes in rates.
There are also a couple of Treasury auctions that are also worth noting. The 5-year sale Wednesday and the 7-year auction on Thursday may influence bond trading and possibly mortgage rates if they are met with an exceptional demand or if there is lackluster interest from investors. There is a pretty good possibility of seeing mortgage rates change several times this week, so please proceed cautiously if still floating an interest rate.
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