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Wednesday’s bond market has opened fairly flat with nothing of importance
scheduled for release this morning. The stock markets are mixed with the
Dow down 18 points and the Nasdaq up 4 points. The bond market is
currently nearly unchanged from yesterday’s close, but we will likely
still see a slight improvement in this morning’s mortgage rates due to
strength late yesterday.
The first of this week’s two important Treasury auctions is being held
today. The Treasury is selling 10-year Notes today and 30-year Bonds
tomorrow. These sales can influence market trading in bonds and possibly
affect mortgage rates if they are met with a particularly strong or weak
demand from investors. Because the 10-year Note is the benchmark bond
market security, we should see a reaction to the auction results this
afternoon. This will likely be an improvement to mortgage rates if there
was a strong level of buyer interest in the sale. However, if investor
interest was lackluster, we may see bonds fall after results are posted.
The results of each sale will be posted at 1:00 PM ET each day, so any
reaction will come during early afternoon trading.
Also this afternoon is the release of the minutes from the last FOMC
meeting. There is a good possibility of the markets reacting to them
following their 2:00 PM ET release. I find it hard to believe that they
could reveal anything more surprising than we got after the last FOMC
meeting or during Chairman Bernanke’s press conference that followed.
Still, market participants will be looking for anything new, particularly
about the estimated timeframe when the Fed will begin tapering their current
$85 billion a month bond buying program (QE3). The minutes will tell us
how members voted for related motions and could cause more volatility in
the markets if there is anything unexpected in them.
Fed Chairman Bernanke has a speaking engagement today after the markets
close. The topic is related to the history of the Fed’s monetary policy
and he will be speaking to a group of economists in Boston. I don’t see
this speech causing much movement in the markets, but anytime the Fed
Chairman speaks publicly, his words draw attention. If there is a
reaction to his speech, we won’t see it until tomorrow’s morning trading.
Tomorrow’s only relevant economic data is the weekly unemployment update
from the Labor Department. They are expected to announce that 345,000 new
claims for unemployment benefits were filed last week. This would be a
slight increase from the previous week, but we would ideally like to see
a large increase in initial claims. The higher the number of new claims,
the better the news it is for the bond market and mortgage rates since
rising claims indicate a softening employment sector.
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...
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