|
Tuesday’s bond market has opened in negative territory despite the lack of
any relevant economic news and early stock weakness. The major stock
indexes are showing sizable losses during early trading, mostly as a result
of volatility in overseas markets. That has pushed the Dow lower by 124
points while the Nasdaq has lost 33 points. The bond market is currently
down 11/32, upping the yield on the benchmark 10-year Treasury Note to
2.25%. This will likely push this morning’s mortgage rates higher by
approximately .250 of a discount point even though we saw some afternoon
strength late yesterday that caused some lenders to improve pricing.
There is nothing of relevance scheduled for release today or tomorrow in
terms of economic data. This leaves outside influences to help direct bond
prices and mortgage rates. Unfortunately, this should have been good news
for mortgage rates today with stocks being in selling mode. However, it
looks as all U.S. securities are of little interest today with stocks and
bonds both in negative ground. Still, our best hope for an afternoon
improvement to mortgage rates lies with the weakness in stocks. If the
major stock indexes extend their early losses, bonds could find some
support and move higher from current levels. That would be good news for
mortgage shoppers because bond prices and yields move in opposite
directions and mortgage rates tend to follow bond yields.
Even though there is no important economic data scheduled for release
tomorrow, we do have something to watch that can cause movement in mortgage
rates. The first of the week’s two relevant Treasury auctions will be held tomorrow
when 10-year Treasury Notes will be sold. If the sale is met with a good
level of investor demand, we may see the broader bond market strengthen and
mortgage rates move slightly lower. This is an afternoon event though since
the results of the sale will be posted at 1:00 PM ET tomorrow.
The week’s important economic news starts early Thursday morning with one
release (May’s Retail Sales). That leaves three reports for Friday, one of
which is considered highly important to the bond market (May’s Producer
Price index). Until we get to that data, the best we can do is watch stocks
for bond market and mortgage rate direction. Usually, stock weakness pushes
funds into bonds and lowers mortgage rates. The key word in that sentence
though is "usually." There is no way to explain or justify
today’s weakness with stocks so far into negative ground. Let’s hope
rationale returns to the bond market later today or tomorrow morning and
stocks extend their losses.
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... Float if my closing was taking place between
21 and 60 days... Float if my closing was taking place over 60 days from
now...
|
No comments:
Post a Comment