September 9th, 2008 3:02 PM by Lehel Szucs
Tuesday's bond market has opened in positive territory following early stock losses. The stock markets are giving back a good portion of yesterday's gains with the Dow down 95 points and the Nasdaq down 21 points. The bond market is currently up 10/32, which should improve this morning's mortgage rates by approximately .250 of a discount point.
There is no relevant economic news scheduled for release today or tomorrow. The government did release some interesting information regarding the U.S. budget deficit. It estimated that the deficit was going to stand at $407 billion this fiscal year (October 1st through September 30th), which is an increase of over 150% from last year's deficit. This news may come into play more often in the near future and could negatively affect bonds since the government will likely need to issue more debt to cover the deficit.
The first economic report of the week is not considered to be of high importance. July's Good s and Services Trade Balance data will be posted Thursday morning, giving us the size of the U.S. trade deficit. It is expected to show a deficit of approximately $58.0 billion, which would be an increase from June's $56.8 billion. However, I would consider this the least important of this week's releases, meaning it will likely have little impact on bond trading or mortgage rates.
Overall, the latter part of the week will likely be pretty active for the bond market and mortgage rates. Friday's Retail Sales and PPI reports are the week's most important and make Friday the biggest day of the week. If we see weaker than expected readings in that data, we should see mortgage rates move lower for the week. However, stronger than expected readings will likely drive bond prices lower and mortgage rates higher.
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 pla ce 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.