Daily market commentary

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Tuesday’s bond market has opened in positive territory with stocks in negative ground again. The major stock indexes are showing relatively minor losses with the Dow down 41 points and the Nasdaq down 7 points. The bond market is currently up 9/32, which with the strength from late yesterday should improve this morning’s mortgage rates by approximately .125 - .250 of a discount point over Monday’s morning pricing. There is nothing of relevance to mortgage rates being released or happening today, leaving the stock markets to influence bond trading and mortgage rates. Further stock weakness should help boost bond prices and possibly lead to afternoon improvements in mortgage rates again today. As long as the major stock indexes don’t rally today, mortgage rates should remain near current levels or possibly improve slightly. Tomorrow also has no relevant economic news set for release, but we do have the first of this week’s two Treasury auctions that has the potential to affect rates. 10-year Treasury Notes will be sold tomorrow and 30-year Bonds on Thursday. Tomorrow’s sale is the more important of the two as it will give us a better indication for demand of mortgage-related securities. If the sales are met with a strong demand from investors, we should see the bond market move higher during afternoon. But a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and could lead to broader bond selling. The selling in bonds would likely result in afternoon upward revisions to mortgage rates. The rest of the week doesn’t bring us much to look forward towards or to be concerned about. Besides Thursday’s 30-year Bond auction and weekly unemployment update, we also have a couple of central bank announcements from overseas (equivalent to our FOMC) before the markets open Thursday and the week’s only monthly economic report early Friday morning. Still, as we are seeing this morning, I would not be surprised to see more movement in mortgage rates the rest of the week. It is my opinion that such a move is more likely to be downward than an increase in rates, but please maintain contact with your mortgage professional if still floating an interest rate. If I were considering financing/refinancing a home, I would.... Float 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...       Alan Russell 161 South San Antonio Rd. | Los Altos, CA 95022 Ph: 650-947-2296 ? Fax: 408-335-1118 alanrussell@princetoncap.com