September 8th, 2009 10:59 AM by Lehel Szucs
Tuesday's bond market has opened flat after the holiday weekend with no relevant economic data scheduled for release today and only minor gains in the stock markets. The major stock indexes have opened the week relatively calm with the Dow up 32 points and the Nasdaq up 7 points. The bond market is nearly unchanged from Friday's close, but we will still likely see an increase of approximately .125 of a discount point over Friday's morning rates.
This week brings us the release of only three pieces of economic data, but none of them are considered to be highly important. In addition to the economic releases, we also have two Treasury auctions that may play a role in this week's mortgage pricing.
The first release of the week comes Wednesday afternoon. The Federal Reserve will release its Beige Book report at 2:00 PM ET Wednesday. This report details current economic conditions in the U.S. by region. It is believed to be a key source of data whe n the Fed meets for their FOMC meetings and is usually released approximately two weeks prior to each meeting. If it reveals any significant surprises, we may see movement in the markets and mortgage pricing as analysts adjust their theories on the Fed's next move. Most likely though, it will be a non-event and will not lead to a noticeable change in mortgage rates.
Also Wednesday is the 10-year Treasury Note auction, which will be followed by the 30-year Bond auction Thursday. It is fairly common to see some weakness in bonds before these sales as investors prepare for them. But, if the sales are met with a decent demand from investors, those losses are normally recovered after the results are announced. The results will be posted at 1:00 pm ET each day. If demand was strong, particularly from international investors, we should see mortgage rates improve during afternoon trading Wednesday and Thursday.
Overall, this week looks like it will be much less active for mortgage rates than last week was. We only have four days of trading to be concerned with. There is no particular data that is important enough to label its day of release as the most important of the week. This may allow the stock markets to heavily influence bond trading and therefore, impact mortgage rates this week. As long as the stock markets do not stage a sizable rally or sell-off this week, I believe we will only see minor changes to mortgage rates the next few days.
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... 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