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Tuesday’s bond market has opened in negative territory even with a lack of
economic news and an uneventful open in stocks. The major stock indexes are
mixed with the Dow up 34 points and the Nasdaq down 7 points. The bond
market is currently down 9/32, which will likely push this morning’s
mortgage rates higher by approximately .125 - .250 of a discount point.
There is nothing of relevance on today’s calendar, but that hasn’t
prevented a negative open in bonds. This morning’s losses have pushed the
yield on the benchmark 10-year Treasury Note back above 2.50% (currently
2.52%). It is important for it to move back under that threshold for
mortgage rates to start a downward trend. If not, the risk of bond yields
and mortgage rates moving higher in the immediate future is fairly high in
my opinion.
June's New Home Sales report will be posted at 10:00 AM ET tomorrow. This
Commerce Department report gives us another measurement of housing sector
strength and is the sister release of yesterday’s Existing Home Sales
report. Analysts are expecting it to show an increase in sales of newly
constructed homes, indicating that the new home portion of the housing
sector gained some strength last month. That would be considered negative
news for bonds, but since this data tracks only a small percentage of all
home sales it usually has little impact on the bond market and mortgage
rates unless it varies greatly from forecasts. Yesterday’s report covered
most of the home sales in the U.S.
Tomorrow also has the first of this week’s two Treasury auctions that could
influence bond trading and mortgage pricing. 5-year Treasury Notes will be
sold tomorrow while the 7-year Note auction will be held Thursday. Results
will be posted at 1:00 PM ET each day. If investor interest is strong, we
can expect the broader bond market to strengthen and mortgage rates to move
lower. However, a lackluster demand could lead to bond selling and higher
mortgage rates during afternoon tomorrow and Thursday.
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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