Daily commentary

Greetings! Here's your Daily Commentary report compliments of Alan Russell & Princeton Capital! Call me today for current rates and market information at (650) 947-2296.           Friday’s bond market has opened well in positive territory due to much weaker than expected results in this morning’s only relevant economic data. Stocks are minor gains during early trading with the Dow up 25 points and the Nasdaq up 12 points during early trading. The bond market is currently up 24/32, which should improve this morning’s mortgage rates by approximately .250 - .375 of a discount point over yesterday’s morning pricing. The Commerce Department gave us today’s only relevant economic news and it was relatively dismal compared to forecasts. They announced that sales of newly constructed homes fell 13.4% last month and also revised June’s sales lower by 8.4%, indicating that the new home portion of the housing sector was much weaker than previously thought the past two months. This is the first clear sign that the recent spike in mortgage rates is having a detrimental impact on housing growth, making it great news for the bond market and mortgage rates. That has fueled this morning’s bond rally and improvement in mortgage pricing. Hopefully it can be sustained throughout the afternoon, preventing the common Friday afternoon weakness in bonds. The yield on the benchmark 10-year Treasury Note closed yesterday at 2.90%. This is pretty close to the threshold of 2.95% that I predicted would bring buyers into bonds and possibly allow a downward trend in mortgage rates to start. Especially considering that number was pegged back when yields were in the 2.42 – 2.52% range. However, I am a little suspicious of this morning’s move and its ability to hold. The 10-year yield is currently at 2.81% due to this morning’s rally. While today’s report is good news and the variance from forecasts was fairly significant, it still isn’t a major piece of data. My fear is that this is just a knee-jerk reaction to a bit of good news and not a true belief from traders that the upcoming economic data is going to deter the Fed from delaying their much anticipated tapering of QE3. If I am accurate, we can expect to see some of this morning’s bond gains and rate improvements to be given back within the next business day or two. My point is, welcome this morning’s gains, but proceed cautiously if still floating an interest rate. Next week brings us a handful of economic reports that may affect mortgage rates. None of them are considered to be key data, but do carry enough importance to cause a change in mortgage pricing. Unlike most Mondays, there is something of relevance scheduled for this Monday. The Commerce Department will post July’s Durable Goods Orders report early Monday morning, giving us a fairly important measurement of manufacturing sector strength. Look for details on it and the rest of 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... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...       Alan Russell 161 South San Antonio Rd. | Los Altos, CA 95022 Ph: 650-947-2296 | Fax: 408-335-1118 alanrussell@princetoncap.com CLICK HERE TO STOP RECEIVING OUR REPORT