Market update

Wednesday’s bond market has opened in negative territory due to early stock strength. Traders may also be taking a cautious approach ahead of today’s Fed calendar, contributing to the early pressure in bonds. The major stock indexes are showing noticeable gains with the Dow up75 points and the Nasdaq up 17 points. The bond market is currently down 12/32, which will likely push this morning’s mortgage rates higher by approximately .125 of a discount point. There is nothing of relevance to mortgage rates being released this morning. The spotlight is on this afternoon’s three Fed events that could be major market movers or possibly relatively speaking- non factors. The two day FOMC meeting began yesterday and will adjourn at 2:00 PM ET this afternoon. It is widely expected that Mr. Bernanke and friends will not change key short-term interest rates at this meeting, but there is rising concern in the market that the Fed may cut back their current bond-buying program (QE3) to help ease future issues. Any word on this topic either way could heavily influence the markets and mortgage rates. Also at 2:00 PM, the Fed will update their economic and monetary policy projections. Any significant revisions to the Fed's outlook on unemployment, GDP growth or their timetable for keeping key rates at current levels will also cause volatility in the markets and mortgage rates. Furthermore, the meeting and projections will be followed by a press conference with Fed Chairman Bernanke at 2:30 PM ET. It could also lead to a fair amount of afternoon volatility in the markets and mortgage rates during afternoon hours today. There are two monthly economic reports scheduled for release tomorrow morning along with the weekly unemployment update from the Labor Department. None of the data is of significant concern but it could lead to small revisions in mortgage rates. We will be updating this report shortly after the markets have an opportunity to react to this afternoon’s Fed events and will address tomorrow’s data in the afternoon revision. 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