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Monday’s bond market initially opened in negative territory but has since
rebounded into positive ground following much weaker than expected
economic news. The stock markets are mixed with the Dow up 60 points and
the Nasdaq down 2 points. The bond market is currently up 7/32, which
will improve this morning’s mortgage rates by approximately .125 of a
discount point. However, that is much better than what early trading
indicated we would be at before the data posted.
Today’s only relevant economic data came late this morning when the
Institute for Supply Management's (ISM) posted their manufacturing index
for May. They announced a reading of 49.0 that surprised many. This was
well below the 50.9 that expected and a sizable decline from April’s
50.7. But more importantly it was below the benchmark reading of 50.0
that points towards economic growth. The sub-50 reading means that more
surveyed manufacturers felt business worsened last month than those said
it had improved. That is a significant sign of manufacturing sector
weakness, making the data very good news for the bond market and mortgage
rates.
The rest of the week brings us five more economic reports, one of which
is extremely important. Tomorrow’s only data is April's Goods and
Services Trade Balance report. It gives us the size of the U.S. trade
deficit and will be released at 8:30 AM ET. It isn't likely to cause much
movement in the markets or mortgage rates and is the week’s least
important report, but nevertheless forecasters are expecting to see a
$41.1 billion trade deficit. It will take a wide variance from this projection
for the data to influence mortgage rates.
Overall, it appears that Friday is the key day of the week with regards
to mortgage rate movement with the almighty Employment report on tap. As
expected, today is an active day for mortgage rates and we could see the
same on Wednesday since there are three reports scheduled for release.
Tomorrow will probably be the lightest day unless something totally
unexpected happens with stocks. Although, as we have seen many times over
the past couple weeks, we don’t have to have an event or economic report
released for the bond market and mortgage rates to become volatile.
Therefore, it would be prudent to continue to maintain contact with your
mortgage professional if still floating an interest rate and closing in
the near future.
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...
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