May 4th, 2009 8:14 AM by Lehel Szucs
Monday's bond market has opened down slightly following early stock gains. The stock markets are starting the week in positive territory with the Dow up 93 points and the Nasdaq up 16 points. The bond market is currently down 4/32, but we will likely still see a slight improvement to mortgage rates due to strength in bonds late Friday.
There is no relevant economic news scheduled for release today. The week is very light in terms of the number of scheduled economic releases. However, we may still have an active week in the markets and mortgage rates due to the importance of the data that is being released and the other events on the calendar. There are only two reports scheduled that are worth watching, but one of them is highly important to bonds and mortgage rates.
The first event of the week will be testimony of Fed Chairman Bernanke as he speaks before a Joint Economic Committee late tomorrow morning. The topic will be the economy and the F ed's outlook for future activity. Market participants will be watching his words closely, which means that we will likely see some volatility in trading as he speaks. He will begin at 10:00 AM ET, so look for fluctuations in the markets during late morning trading and potential revisions to rates early afternoon.
The Labor Department will release its 1st Quarter Productivity and Costs data early Thursday morning and April's Employment figures Friday morning. Thursday's report is fairly important, but Friday's data is one of the most important reports we see each month.
In addition to this week's economic data, we also have Treasury auctions that can influence bond trading and affect mortgage rates. The Treasury will hold a 10-year Note sale Wednesday and a 30-year Bond sale Thursday. Results of the auctions will be posted at 1:30 PM ET each day. If they were met with a strong demand from investors, we could see bond prices rise enough during afterno on trading to cause downward revisions to mortgage rates. However, lackluster bidding could lead to higher mortgage pricing those afternoons.
Overall, I am expecting to see a fairly active week in mortgage rates. Expect to see movement in rates multiple days this week. Tomorrow's speech and Friday's Employment report will heavily influence trading, likely making them the most important days. However, Thursday's data and Treasury auction may also lead to noticeable changes in rates. Accordingly, I would strongly recommend maintaining contact with your mortgage professional the next few days 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... 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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