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Wednesday’s bond market has opened flat as investors await today’s
activities. The stock markets are showing minor losses with the Dow down
36 points and the Nasdaq down 3 points. The bond market is currently
nearly unchanged from yesterday’s close, which should keep this morning’s
mortgage rates close to yesterday’s morning pricing.
There is no economic data being released today that is relevant to
mortgage rates, but we do have three very important Fed events for the
markets to digest. The first comes at 12:30 PM ET when the FOMC meeting
that began yesterday will adjourn. It is widely expected that Mr.
Bernanke and company will not change key short-term interest rates at
this meeting, but there is a great deal of speculation that they will
address or clarify their intentions on tapering their current bond-buying
program (QE3). The post-meeting statement may or may not answer some of
the questions that analysts and traders have. If it does, look for an
immediate reaction in the financial and mortgage markets.
Next is the Fed’s updated economic projections at 2:00 PM ET. They will
likely post their predictions on GDP growth, unemployment and inflation.
These could be a market mover if they show even minor revisions to any of
the key headline economic numbers. The larger the change, the more likely
the markets will react. Revisions that point toward slower economic
growth would be good news for the bond market and mortgage rates.
The most important event could be the last. This would be the press
conference hosted by Fed Chairman Bernanke at 2:15 PM ET. The key topics
will be unemployment, QE3 and what change the Fed expects to make and
when it will likely happen. It also allows participants to seek more
specific answers that the post-meeting statement and projections do not
provide. Therefore, this could cause a larger reaction in the markets
than the previous two events did.
There is a very high likelihood of seeing a great deal of volatility in
the markets and also mortgage rates this afternoon. Therefore, please
proceed cautiously if floating an interest rate. We will post an update
to this report shortly after the press conference so the markets have an
opportunity to digest all three Fed events.
If I were considering financing/refinancing a home, I would.... Lock 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...
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