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Monday’s bond market is starting the week off in positive territory. The
major stock indexes are mixed during early trading with the Dow up 46
points and the Nasdaq down 5 points. The bond market is currently up 8/32,
which should improve this morning’s mortgage rates by approximately .250 of
a discount point.
There is nothing of importance scheduled for release today to drive
trading, but the rest of the week has five economic reports scheduled for
release that are relevant to mortgage rates in addition to the minutes from
last month’s FOMC meeting. A couple of the reports are considered highly
important to the markets, meaning we could see noticeable movement in rates
more than one day.
It starts tomorrow with the release of the 3rd Quarter Employment Cost
Index (ECI) at 8:30 AM ET tomorrow. This data tracks employer costs for
salaries and benefits, giving us an indication of wage inflation pressures.
Rapidly rising costs raises wage inflation concerns and may hurt bond
prices. It is expected to show an increase in costs of 0.5%. A smaller than
expected increase would be good news for mortgage rates, but this is not
one of the more important reports of the week. Therefore, it will likely
take a large variance from forecasts for this report of have a noticeable
influence on mortgage pricing.
Overall, I am expecting Wednesday to be the most active day for mortgage
rates with three economic reports and the FOMC minutes set for release, but
Thursday could be a little volatile also with the second inflation reading
of the week. The yield on the benchmark 10-year Treasury note closed last
week just above 2.70% but this morning’s gains have pushed it below that
support level. I am watching this move carefully to see if it can hold. If
it does, there appears to be plenty of room for more improvements. On the
other hand, a rebound above 2.70% would renew my concerns about further
increases to mortgage rates in the immediate future.
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... Lock if my closing was taking place over 60 days from
now...
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