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Friday’s bond market has opened in positive territory despite stronger
than expected economic news. The stock markets are helping to keep bonds
in positive ground with early losses. The Dow is currently down 60 points
while the Nasdaq has lost 18 points. The bond market is currently up
7/32, pushing the yield on the benchmark 10-year Treasury note below
2.00% (1.99%). That, along with some strength late yesterday, should lead
to an improvement of approximately .125 - .250 of a discount point in
this morning’s mortgage rates.
There was only one report posted this morning that was relevant to
mortgage rates, but it was the week’s most important piece of economic
data. The Commerce Department announced early this morning that new
orders for durable goods at U.S. manufacturers rose 3.3% last month. This
was twice the increase that analysts were expecting to see, indicating a
stronger manufacturing sector. Even a secondary reading that excludes
larger and more volatile transportation-related items such as airplanes
showed a stronger than predicted increase. Since those readings point
towards a strengthening manufacturing sector, we should consider the data
to be negative for the bond market and mortgage rates. Fortunately
though, market traders aren’t too concerned about the news and they have
not had much of an influence on this morning’s mortgage pricing.
Keep in mind that the bond market will close at 2:00 PM ET today and will
remain closed Monday in observance of the Memorial Day holiday. The stock
markets are open for a full day today, but will also be closed Monday.
This early close and long weekend sometimes adds additional volatility to
trading as investors look to protect themselves over the long weekend.
Although there isn’t any headline crisis situations going on right now
that are expected to make news over the weekend, we have seen a great
deal of fluctuation in trading recently without it. Therefore, I would
not be too surprised to see a little pressure in bonds as we head into the
early close. Hopefully though, it will not be anything like we saw
several afternoons when bonds turned decidedly south.
Next week is fairly busy with a handful of economic reports worth
watching and two potentially relevant Treasury auctions. None of the data
is considered to be highly important to the bond market and mortgage
rates, but as we saw this week, it doesn’t take an economic report of
high importance to cause volatility in the markets and mortgage rates.
There is something of relevance scheduled all four days, with the most
important economic releases to be Tuesday and Friday. Look for details on
next week’s events in Sunday’s weekly preview.
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...
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