September 2nd, 2009 9:49 AM by Lehel Szucs
Wednesday's bond market has opened in positive territory following early volatility in stocks and favorable economic data. The stock markets have fluctuated between positive and negative ground this morning, but the Dow and Nasdaq are both currently up a couple of points. The bond market is up 4/32, which with yesterday's late strength should improve this morning's mortgage rates by approximately .250 of a discount point compared to yesterday's morning rates.
The 2nd Quarter Productivity revision was posted early this morning, showing an annual rate of 6.6%. This was a little higher than expected, which is good news for bonds and mortgage rates because strong levels of worker output allows the economy to grow without inflation concerns.
The second relevant report was July's Factory Orders data. It showed a smaller than expected increase in new orders. The 1.3% increase instead of the forecasted 1.5% indicates that manufacturing activity was no t as strong as expected. This is also good news for bonds and mortgage rates, but this data is not considered to be highly important to the markets. Therefore, its impact on this morning's trading has been minimal.
Later today, we will get to see the minutes from the last FOMC meeting. There is a pretty good possibility of the markets reacting to them following their 2:00 PM ET release, especially if they show some divisiveness by its members. It will be interesting to see some of the Fed member's views on the economy and inflation and if they will hint what the Fed's next move may be. But this is one of those events that can cause significant movement in rates after its release or be a non-factor. It generally causes a little movement in bond prices but not enough to significantly affect mortgage pricing.
Tomorrow does not have any important economic news scheduled for release. The Labor Department will give us last week's unemployment figures, but t hese are not considered to be of much concern to mortgage pricing. Analysts are expecting to see little change from the previous week's number of new claims for unemployment benefits.
If I were considering financing/refinancing a home, I would.... Lock 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 2009