June 11th, 2009 9:43 AM by Lehel Szucs
Thursday's bond market has opened flat after this morning's economic data failed to give us any major surprises. The stock markets are showing gains with the Dow up 70 points and the Nasdaq up 13 points. The bond market is currently nearly unchanged form yesterday's close, but we will still likely see a slight increase in mortgage pricing due to weakness in bonds late yesterday.
Yesterday's afternoon weakness came partly as a result the Treasury auction results and the Fed Beige Book contents. Yesterday's 10-year Note auction was actually received fairly well, but a couple of complex things transpired with bidding and the rates they were bought that led to selling after the results were posted. We also, we have a 30-year Bond sale today to watch out for.
The Fed Beige Book revealed that the economy continued to weaken in most regions through May, but that some regions had reported it to be slowing. The employment sector remained flat and most regions reported a still softening housing market. Overall, the report did not surprise many, but the slower pace of the weakening economy led some to believe that the bottom may be near. This supports the theory that the economy may pull out of the recession later this year.
This morning's data was pretty uneventful. May's Retail Sales data showed a 0.5% increase in sales, which matched forecasts. The portion of the report that tracks sales excluding volatile auto sales revealed a higher than expected increase. But this news did not have much influence on this morning's trading or mortgage rates.
The Labor Department reported that 601,000 new claims for unemployment benefits were filed last week. This was lower than the 615,000 that many were expecting, but this data is not important enough to heavily impact trading or mortgage rates unless it varies greatly from forecasts.
The last report of the week is June's preliminary reading to t he University of Michigan Index of Consumer Sentiment late tomorrow morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. It is expected to show a reading of 69.5. A smaller than expected reading would be considered good news for bonds, but since this report is only moderately important it likely will not influence mortgage rates considerably.
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... 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