Next days market update!

Wednesday’s bond market has opened up sharply following President Obama’s reelection yesterday. Helping to boost bond prices is early weakness in stocks. The major stock indexes are posting significant losses, partly due to the election and the rest because of negative comments made from the European Central Bank President about their economy. The Dow is currently down 221 points while the Nasdaq has lost 43 points during early trading. The bond market is currently up 33/32, which should point towards a sizable improvement in this morning’s mortgage rates. Unfortunately, noticeable weakness in bonds late yesterday will limit this morning’s improvement to approximately .250 of a discount point if comparing to Tuesday’s morning pricing.

There is nothing in terms of factual economic data scheduled for release today, but we do have the first of this week’s two Treasury auctions that have the potential to influence mortgage rates. These are today’s 10-year Note sale and tomorrow’s 30-year Bond auction. The 10-year sale is the more important of the two as it will give us a better indication of demand for mortgage-related securities. If the sales are met with a strong demand from investors, we should see the bond market move higher during afternoon hours. But a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader bond selling. The selling in bonds would probably result in upward revisions to mortgage rates. Results of the sales will be posted at 1:00 PM ET each day, so any reaction will coming during early afternoon trading.

Also worth noting but not much of a concern is the next part of Greece’s bailout package. The drastic cuts and tax increases that are required for Greece to receive the next portion of funding are being voted on today by their Parliament. It is expected to pass, partly because without the funding, Greece would run out of money next week. However, if something totally unexpected happens and it does not get voted on or pass, we could see significant movement in the global markets.

There are two bits of economic data being released tomorrow, neither of which are considered to be highly important. The first monthly data of the week is September's Goods and Services Trade Balance report at 8:30 AM ET. It helps us measure the size of the U.S. trade deficit, but usually is not a major influence on bond trading or mortgage pricing. It does affect the value of the U.S. dollar, which makes U.S. securities more attractive to international investors when the dollar is strong. This is because the securities' proceeds are worth more when sold and converted to the investor's domestic currency. However, its results will not likely directly lead to changes in mortgage rates. Analysts are expecting to see a $45.4 billion trade deficit.

The second report is the weekly unemployment update from the Labor Department, also early tomorrow morning. They are expected to announce that 370,000 new claims for unemployment benefits were filed week, up from the previous week’s total of 363,000 initial claims. Ideally, the bond market would like to see a large increase in claims because it indicates employment sector and overall economic weakness. However, since this report tracks only a single week’s worth of new claims, it usually has little influence on the markets or mortgage rates unless it shows a significant variance from forecasts.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Float 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...