September 24th, 2009 2:46 PM by Lehel Szucs
Thursday's bond market has opened in positive territory following early stock weakness and news of an unexpected decline in home sales. The stock markets are showing losses with the Dow down 38 points and the Nasdaq down 25 points. The bond market is currently up 9/32, which will likely improve this morning's mortgage rates by approximately .125 - .250 of a discount point compared to yesterday's morning rates.
The Labor Department announced this morning that 530,000 new claims for unemployment benefits were filed last week. This was much lower than the 550,000 that was expected, meaning the employment sector was stronger than thought last week. That is bad news for bonds and mortgage rates, but since this data tracks only a week's worth of new claims, its impact on rate has been minimal.
The National Association of Realtors gave us today's second piece of data with the release of August's Existing Home Sales report. They said that resales of ex isting homes fell 2.7% last month when analysts were expecting them to report an increase. This was the first decline in five months, raising concerns that the housing sector may not be recovering as quickly as some had hoped. This is good news for bonds and mortgage rates because a broader economic recovery would be difficult with the housing sector still softening.
Today is the 7-year Treasury Note sale. If it is met with a similarly weak demand as yesterday's 5-year Note sale was, we could see mortgage rates move higher during afternoon trading. However, a strong demand from investors could lead to afternoon improvements to mortgage rates. This sale can be considered more important for mortgage rates than yesterday's 5-year auction was, meaning we may see a bigger reaction to its results than we did yesterday.
Tomorrow morning brings us the release of three economic reports, including the week's most important one. That is Aug ust's Durable Goods Orders, which will be posted early morning. This report gives us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. Current forecasts call for an increase in orders of 0.5%. A smaller than expected increase could help bond prices and cause mortgage rates to drop tomorrow. However, a larger than expected rise would indicate a stronger than expected manufacturing sector and would likely help push mortgage rates higher.
The second report is the University of Michigan's Index of Consumer Sentiment. This is the revised reading for September. The preliminary reading that was released earlier this month revealed a 70.2 reading. Analysts are expecting to see a small upward revision, meaning consumer confidence was slightly higher than previously thought. A lower than expected reading would be good news for bonds and help improve mortgage rates tomorrow.
The final report of the week is A ugust's New Home Sales. It is expected to show that sales of newly constructed homes rose slightly in August. As with most of this week's data, this report will likely not have a significant impact on mortgage rates unless its readings differ greatly from forecasts.
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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