July 21st, 2008 9:47 AM by Lehel Szucs
Monday's bond market has opened flat after this morning's only economic news met forecasts. The stock markets are showing losses with the Dow down 46 points and the Nasdaq down 6 points. The bond market is currently unchanged form Friday's close, but we will still see an increase in this morning's mortgage rates of approximately .250 of a discount point due to weakness late Friday.
The Conference Board reported that their Leading Economic Indicators (LEI)for June fell 0.1%, as latest forecasts had called for. This index attempts to measure economic activity over the next three to six months, meaning economic activity may remain flat in the near future. This is basically good news for bonds and mortgage rates.
This week will be interesting for the bond market and mortgage rates. There are five remaining economic reports scheduled for release, but only one of them is considered to be of high importance to the markets. With data being posted all bu t one day of the week, we may see some noticeable fluctuations from day to day in mortgage pricing.
The Federal Reserve will release its Beige Book report Wednesday afternoon. This report is named simply after the color of its cover, but it is considered to be important to the Fed when determining monetary policy during their FOMC meetings. It details economic activity and conditions by region throughout the U.S. With Fed Chairman Ben Bernanke's testimony last week, I don't think we will see any significant surprises in this report, and therefore will likely not cause much movement in mortgage rates Wednesday afternoon.
Overall, this is a moderately significant week for the bond market and mortgage rates. If we get weaker than expected economic results, we may see mortgage rates move lower for the week. However, stronger than expected results will likely lead to higher rates for the week. We also have a 5-year Treasury Note auction Thursday that may in fluence bond trading but will also give us an indication of investor appetite for bonds. Generally speaking, despite the lack of a data-packed calendar, I would still maintain constant contact with your mortgage professional.
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.
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