May 26th, 2010 12:47 PM by Lehel S.
The bond market has moved lower following today's 5-year Treasury Note auction. The stock markets have also given up a good portion of this morning's early gains. The Dow is currently up 56 points after being up nearly 135 points earlier. The Nasdaq has also fallen from earlier highs, currently up only 23 points. The bond market has extended this morning's losses, currently down 21/32. This will likely lead to an upward revision to this afternoon's mortgage rates of approximately .125 - .250 of a discount point.
This morning's economic data gave us mixed readings on the economy. The more important of the two was April's Durable Goods Orders data that showed a 2.9% increase in new orders for big-ticket items last month. It also showed a sizable upward revision to March's orders, indicating that the manufacturing sector was stronger than thought. However, if more volatile transportation related orders were excluded, we would have seen a 1.0% decline in orders. This was much weaker than expected, so overall the data can be considered neutral to slightly positive for the bond market and mortgage rates.
April's New Home Sales data showed a much larger than expected increase in sales of newly constructed homes. This is negative for bonds, but the data usually has little influence on mortgage rates unless it varies greatly from forecasts. This report did show a sizable variance, but it appears that it is has not had much of an impact on today's rates.
The first of two revisions to the 1st quarter Gross Domestic Product (GDP) will be released early tomorrow morning. The second revision to this report comes next month but isn't expected to have much of an impact on the financial markets. The GDP is the sum of all goods and services produced in the U.S. and is considered to be the best indicator of economic growth. Last month's preliminary reading revealed a 3.2% increase in the annual rate of growth. Analysts expect a slight upward revision to this reading with the consensus being a 3.3% rate of growth. If the upward revision is much stronger than expected, we may see the bond market react negatively and mortgage rates move higher.
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... Lock if my closing was taking place between 21 and 60 days... Lock 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.