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Monday’s bond market has opened relatively flat despite the release of
weaker than expected economic data. The stock markets are following suit
with a calm open to the week. The Dow is currently up 15 points while the
Nasdaq has gained 9 points. The bond market is currently up slightly from
Friday’s close, but we should still see an improvement in this morning’s
mortgage rates of approximately .125 - .250 of a discount point due
partly in bond strength late Friday.
Friday’s afternoon gains and this morning’s opening have the yield of the
benchmark 10-year Treasury Note at 2.48%. The fact it closed below 2.50%
Friday and appears able to remain below that level today is fairly
significant for mortgage rate direction, assuming we do close today at
2.49% or lower. Ideally, we would like to see it move more towards and
break below 2.42%, but sub-2.50% is a great start. The farther below
2.50% it goes, it is my opinion the more likelihood that 2.90% is not
coming in the immediate future unless something drastic and unexpected
happens in the markets. This bodes well for mortgage shoppers as mortgage
rates tend to follow bond yields.
Today’s only relevant economic data came from the National Association of
Realtors at 10:00 AM ET. They announced that home resales slipped 1.2%
last month when analysts were expecting an increase in the neighborhood
of 2%. The headline number indicates a softening housing sector that
would be good news for the bond and mortgage markets. However, the report
showed rising prices that points towards a still growing sector. That bit
of news offsets the decline in sales that was favorable to the bond
market. Therefore, we should consider the data neutral for the bond
market and mortgage pricing.
Tomorrow has nothing of importance scheduled for release that will likely
influence mortgage rates, but the remainder of the week has three monthly
reports in addition to two Treasury auctions. We are also still in
corporate earnings season, so any surprises in those releases could
affect stock and bond trading, leading to changes in mortgage rates.
Overall, I am expecting a relatively active week in the financial and
mortgage markets. I don’t see a particularly important day that can be
labeled as the key day of the week, but that doesn’t mean we won’t see
movement in rates multiple days. The most important report of the week is
Thursday’s Durable Goods Orders, so we may see the most movement that day
if the rest of the reports don’t show any significant surprises and the
markets remain calm. Unless corporate earnings or something else fuels a
rally or sell-off in stocks that drive bond trading, tomorrow appears to
be the best candidate as the least important day of the week.
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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