May 5th, 2010 10:21 AM by Lehel S.
Tuesday's bond market has opened well in positive territory due significant stock selling. The stock markets are posting large losses with the Dow down 220 points and the Nasdaq down 74 points. This has helped boost bond prices, pushing the bond market up 14/32, which will likely improve this morning's mortgage rates by approximately .250 of a discount point.
Today's only relevant economic news actually gave us unfavorable results. It showed that March's Factory Orders rose 1.3%, greatly exceeding analysts' forecasts. That indicates that the manufacturing sector was stronger than expected and can be considered bad news for bonds. However, the data is pretty much being ignored this morning as bonds have become a safe-haven from the volatility in stocks. If this continues into afternoon hours, I would not be surprised to see a downward revision to mortgage pricing later today.
There is no relevant data scheduled fro release tomorrow, so look for the stock markets to again be a heavy influence on bond trading and mortgage rates. If today's selling in stocks extends to tomorrow, we could see further improvements to mortgage rates. But if the major stock indexes rebound tomorrow, today's improvements to rates may be erased.
The Labor Department will release its 1st Quarter Productivity and Costs data early Thursday morning. This information helps us measure employee productivity in the workplace. High levels of productivity help allow low-inflationary economic growth. If employee productivity is rapidly rising, the bond market should react favorably. However, a decrease could cause bond prices to drop and mortgage rates to rise Thursday morning. It is expected to show a 2.4% increase in productivity.
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.