May 29th, 2009 10:11 AM by Lehel Szucs
Wednesday's bond market opened fairly flat following a slightly stronger than expected housing report. The stock markets are mixed with the Dow down 18 points and the Nasdaq up 6 points. The bond market is currently down 2/32, but we will see an increase in this morning's mortgage rates of approximately .375 of a discount point due to weakness in bonds late yesterday.
The only relevant economic news of the day came from the National Association of Realtors, who reported that home resales rose 2.9% last month. This was slightly higher than expected but the data has not had much of an impact on today's trading or mortgage rates.
Today's 5-year Treasury Note auction may influence bond trading and possibly mortgage rates if they are met with an exceptional demand or if there is lackluster interest from investors. Results of the sale will be posted at 1:00 PM ET, so any reaction will come during afternoon hours.
Tomorrow morning brings us the release of two relevant monthly reports. The more important of the two is April's Durable Goods Orders data. This report gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket products. It is currently expected to show an increase in new orders of approximately 0.5%. If this report shows a stronger than expected reading, we should see mortgage rates rise because it indicates manufacturing growth. If it shows a smaller than expected rise, we could see rates improve tomorrow morning.
April's New Home Sales data will be released late tomorrow morning. This report gives us a measurement of housing sector strength and future mortgage credit demand. However, it is actually the least important release of the week and probably will not have much of an impact on mortgage pricing. It is expected to show a small increase in sales.
The Labor Department will also give us last week's unemployment figures tomo rrow morning. However, this data likely will not influence mortgage rates unless it varies greatly from the 630,000 new claims that are expected.
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