June 8th, 2009 10:20 AM by Lehel Szucs
This week brings us the release of four pieces of data for the markets to digest. The most important news will be posted late in the week, so we may see the most movement in rates during those days. The first part of the week will likely be driven by stock market gains or losses.
The week's first but least important data is April's Goods and Services Trade Balance report Wednesday morning. This report gives us the size of the U.S. trade deficit and will be released at 8:30 AM. It isn't likely to cause much movement in the markets or mortgage rates, but nevertheless forecasters are expecting to see a $28.7 billion deficit.
Late Wednesday, the Federal Reserve will release its Beige Book. This data details economic conditions throughout the U.S. by region. It is relied upon heavily by the Federal Reserve during FOMC meetings to determine monetary policy. If it shows surprisingly softer economic activity, the bond market may thrive a nd mortgage rates could drop shortly after the 2:00 PM ET release. If it reveals signs of inflation growing, we could see mortgage rates revise higher Wednesday afternoon.
May's Retail Sales data will be released Thursday morning. This report measures consumer spending, which is important to the bond market because consumer spending makes up two-thirds of the U.S. economy. Analysts are expecting to see that sales rose 0.3% last month. A smaller than expected rise in sales would be good news for the bond market and could lead to lower mortgage rates Thursday.
The last report of the week is June's preliminary reading to the University of Michigan Index of Consumer Sentiment late Friday 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 68.6. A small 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.
Also worth noting are two relevant Treasury auctions scheduled for this week. The 10-year Treasury Note sale is scheduled for Wednesday while the 30-year Bond sale will be held Thursday. Results of both auctions will be posted at 1:00 PM ET on the sale days. If investor demand was high, we may see bonds rally during afternoon trading, however, weak demand could lead to selling and an increase to mortgage rates.
Overall, it is going to be a fairly busy week for the financial markets, but the most action will probably come in the latter days. I think that Thursday will be the single most important day of the week, but as we saw last week, we don't need significant news from economic reports for the markets to move heavily and mortgage rates to change. Accordingly, this would be a very good week to maintain fairly constant contact with your mortgage professional?particularly after last week's selling.
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