Daily Market Update

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.           Wednesday’s bond market has opened in negative territory with today’s only economic data showing stronger than expected results. The stock markets are showing fairly minor losses during early trading with the Dow down 41 points and the Nasdaq down 2 points. The bond market is currently down 6/32, which will likely push this morning’s mortgage rates higher by approximately .125 of a discount point. The National Association of Realtors announced late this morning that home resales rose 6.5% last month, exceeding forecasts. The increase pushed the number of sales to their highest level since November 2009, indicating housing sector growth that makes the report bad news for the bond market and mortgage rates. This is because a strengthening housing sector will help support broader economic growth. Since long-term securities such as mortgage-related bonds tend to thrive in weaker economic conditions, we should consider this news negative for rates. We also have this afternoon’s release of the minutes from the last FOMC meeting to watch out for. They will be posted at 2:00 PM ET, so any reaction will come during afternoon hours. There is a pretty good possibility of them affecting the markets as traders and analysts will be looking for how Fed members voted during the last meeting and any comments about inflation concerns in the economy, economic growth and the Fed’s plans for their current bond buying program (QE3). The goal is to form opinions about when Chairman Bernanke and friends are likely to start tapering their current $85 billion monthly bond purchases. This is one of those events that can cause significant movement in rates or be a non-factor, so be prepared for a move, but not surprised if the impact on rates is minimal. Tomorrow has two pieces of economic news that have the potential to influence bond trading and mortgage pricing. The first is the weekly unemployment update from the Labor Department, who is expected to announce that 337,000 new claims for unemployment benefits were filed last week. This would be an increase from the previous week’s 320,000 initial claims, hinting at employment sector weakness. This news will come at 8:30 AM ET and is only moderately important to the markets because it tracks only a single week’s worth of new claims. Therefore, it will likely take a large variance from forecasts for the data to affect mortgage rates tomorrow morning. The second report of the day will come from the Conference Board, who will post its Leading Economic Indicators (LEI) for July at 10:00 AM ET tomorrow. This index attempts to measure economic activity over the next three to six months and is also considered to be moderately important. A higher than expected reading is bad news for the bond market because it indicates that the economy may be strengthening more than thought. However, a weaker reading means that the economy may not grow as much as predicted, making stocks less appealing to investors. This also eases inflation concerns in the bond market and could lead to slightly lower mortgage rates. It is expected to show an increase of 0.5 % in the index, indicating moderate economic growth over the next couple of months. The weaker the reading, the better the news it is for bonds and mortgage rates. 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