August 20th, 2008 10:28 AM by Lehel Szucs
Wednesday's bond market has opened up slightly despite stock gains and a lack of economic news on the day's agenda. The stock markets are showing solid gains after earlier weakness this week. The Dow is currently up 68 points and the Nasdaq up 21 points. The bond market is currently up 6/32, but we will likely see little change in this morning's mortgage rates.
There is no relevant economic news scheduled for release today. The bond market will likely be influenced by stock swings if we are to see any afternoon changes to mortgage rates today. Stocks of mortgage giants Fannie Mae and Freddie Mac have come under fire again and have posted considerable losses this week as investors become more concerned about their stability and the housing market. This could influence mortgage rates also if the fears continue to rise and should be kept on our radar.
Early tomorrow morning, the Labor Department will post last week's new unemployment claims numbe rs. They are expected to fall by 12,000 claims from the previous week to 438,000 new claims. A larger than expected number of claims would be considered good news for bonds and mortgage rates, however, this is not one of the more important reports we see each week. Therefore, unless the number varies greatly from forecasts its impact on rates will probably be minimal.
The Conference Board will give us the last piece of monthly data for the week late tomorrow morning when it releases its Leading Economic Indicators (LEI) for July. This index attempts to measure economic activity over the next three to six months. A higher than expected reading is bad news for the bond market because it indicates that the economy may be strengthening. However, a weaker than expected reading means that the economy may slow in the near future, making stocks less appealing to investors. This also eases inflation concerns in the bond market and could lead to slightly lower mortgage r ates tomorrow if the stock markets remain calm. Current forecasts are calling for a decline of 0.3% in the index.
If I were considering financing/refinancing a home, I would.... Float 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.
©Mortgage Commentary 2008