September 4th, 2008 1:14 PM by Lehel Szucs
Wednesday's bond market has opened flat despite a stronger than expected economic news. The stock markets are showing early losses with the Dow down 20 points and the Nasdaq down 10 points. The bond market is currently nearly unchanged, but we will still likely see an improvement in this morning's mortgage rates of approximately .250 of a discount point due to strength in bonds late yesterday.
The Commerce Department released July's Factory Orders data this morning, revealing a 1.3% increase in new orders. This report measures manufacturing sector strength and is similar to last week's Durable Goods Orders, but includes orders for both durable and non-durable goods. Analysts' latest forecasts were calling for an increase of 0.8% in new orders, meaning manufacturing activity was stronger than expected. However, the data's impact on trading and mortgage rates has been fairly minimal this morning.
Later today, the Federal Reserve will release its Be ige Book report. This report details current economic conditions in the U.S. by region. It is believed to be a key source of data when the Fed meets for their FOMC meetings. It is usually released approximately two weeks prior to each FOMC meeting. If the 2:00 PM ET release reveals any significant surprises, we may see movement in the markets and mortgage pricing as analysts adjust their theories on the Fed's next interest rate move. Most likely though, it will be a non-event and will not lead to a change in mortgage rates.
Tomorrow morning brings us the revision to the 2nd Quarter Productivity numbers, which measures employee productivity in the workplace. It is expected to show an upward change from the previous estimate of a 2.2% annual pace. Forecasts are currently calling for a reading of 3.4%, which would be good news for the bond market and possibly lead to slightly lower mortgage rates tomorrow morning.
If I were considering financing/refinancin g 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 2008