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Tuesday’s bond market has opened in positive territory, extending the
negative momentum of the past couple trading days. The stock markets are
contributing to the pressure in bonds with early gains of 33 points in the
Dow and 6 points in the Nasdaq. The bond market is currently down 5/32,
which will likely push this morning’s mortgage rates higher by
approximately .125 of a discount point.
There is nothing of relevance scheduled for release today. This leaves the
stock markets as the likely cause of any intra-day moves in mortgage rates.
If stocks move higher during late morning and early afternoon trading, we
could see bond prices fall further and mortgage rates revise upward.
However, stock weakness could help push bonds to unchanged from yesterday’s
close. That could be enough to improve mortgage rates slightly this
afternoon.
Of particular interest is the current level of the Dow. Many traders wonder
if the Dow can break 15,000 and close above it (currently 15,002). That
would be a significant psychological benchmark for stock traders that could
fuel further buying. On the other hand, failure of the Dow to break above that
threshold could lead to selling in stocks that could boost bond prices and
help lower mortgage pricing. I suspect it will be somewhat of a battle for
the next couple days, so keep an eye on it for guidance on bond direction.
Tomorrow starts the two days of Treasury auctions that may influence bond
trading and mortgage rates. The Treasury will sell 10-year Notes tomorrow
and 30-year Bonds Thursday. Results of the auctions will be posted at 1:00
PM ET each day. If they are met with a strong demand from investors, we
could see bond prices rise enough during afternoon trading to cause
downward revisions to mortgage rates. However, lackluster bidding in the
sale, meaning longer-term securities are losing their appeal, could lead to
higher mortgage pricing those afternoons. With the recent bond selling, it
is difficult to portray a scenario that gives us high hope for these
auctions. At best, I believe we will be fortunate if they are a non-factor
towards 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... Lock if my closing was taking place between
21 and 60 days... Float if my closing was taking place over 60 days from
now...
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