Daily market update

Greetings! Here's your Daily Commentary report compliments of Alan Russell & Princeton Capital! Call me today for current rates and market information at (650) 947-2296.           Wednesday’s bond market has opened in negative territory due to news of stronger than expected retail-level sales. The stock markets appear not be as impressed with the data as the bond market is concerned with the Dow down 21 points and the Nasdaq down 7 points. The bond market is currently down 6/32, which will likely push this morning’s mortgage rates higher by approximately .125 of a discount point. The Commerce Department announced early this morning that Retail Sales rose 1.1% last month, greatly exceeding forecasts of a 0.5% increase. This means that consumers spent much more last month than many had thought, making the data negative for the bond market and mortgage rates. A good portion of the increase is being attributed to a spike in gas prices, but even if that data is excluded, we still would have seen a sizable increase in sales. Hence the negative reaction in this morning’s early bond trading. Today also has the first of two Treasury auctions scheduled this week that could potentially affect mortgage rates. The first is today’s 10-year Treasury Note auction while the other is the 30-year bond sale tomorrow. Results of the sale will be posted at 1:00 PM ET. If investor demand was high, we may see bonds rally during afternoon trading as it would hint that investors still have an appetite for longer-term securities. However, weak demand in the sale could lead to selling and an increase in mortgage rates this afternoon. Tomorrow has two pieces of economic data worth watching in addition to the 30-year Bond sale. Both will come at 8:30 AM ET, but one is much more likely to affect mortgage rates than the other. The more important of the two February's Producer Price Index (PPI) that measures inflationary pressures at the producer level of the economy. There are two portions of the index- the overall reading and the core data. The core data is more important and watched more closely because it excludes more volatile food and energy (including gasoline) prices. If the index shows a large increase, inflation concerns will rise, making long-term investments such as mortgage-related bonds less attractive to investors. This would lead to higher mortgage rates tomorrow morning. Current forecasts are calling for a 0.6% increase in the overall reading and a 0.2% increase in the core data. Also tomorrow is the weekly unemployment update from the Labor Department. They are expected to say that 350,000 new claims for unemployment benefits were filed last week, up from the previous week’s 340,000 initial claims. This would signal a weakening employment sector that should benefit bonds and mortgage pricing. However, since this report tracks only a single week’s worth of new claims, its impact on the bond market is often minimal unless it shows a large variance from forecasts. The higher the number of new claims filed, the better the news it is for the bond market and mortgage rates. 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...       Alan Russell 161 South San Antonio Rd. | Los Altos, CA 95022 Ph: 650-947-2296 | Fax: 408-335-1118 alanrussell@princetoncap.com CLICK HERE TO STOP RECEIVING OUR REPORT