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Thursday’s bond market has opened in negative territory, extending
yesterday’s selling. The stock markets are mixed yet again with the Dow
down 56 points and the Nasdaq up 10 points. The bond market is currently
down 11/32, which should push this morning’s mortgage rates higher by
approximately .250 of a discount point.
The Commerce Department reported early this morning that new orders for
durable goods or big-ticket products rose 4.2% last month. This was a
larger than expected increase, indicating a stronger than predicted
manufacturing sector. However, this data is known to be quite volatile from
month to month and a secondary reading that excludes higher priced items
such as airplanes and other transportation-related orders showed no change
from May when analysts had forecasted a small increase. So, even though the
headline number showed stronger than expected activity, the data hasn’t
really had too much of an influence on this morning’s mortgage rates.
Also posted early this morning was the weekly unemployment update from the
Labor Department. They announced that 343,000 new claims for unemployment
benefits were filed last week, up from the previous week’s revised total of
336,000. Analysts were expecting to see an increase of 6,000 new claims.
The variance wasn’t enough to cause any alarm or joy in the markets. In
other words, we can consider the data neutral and uneventful for the bond
market and mortgage rates.
Yesterday’s 5-year Treasury Note auction didn’t go very well with several
benchmarks we use to gauge investor demand showing relatively weak
interest. That doesn’t give us much to be optimistic about in today’s
7-year Note auction. Results will be posted at 1:00 PM ET, so any reaction
in the bond and mortgage markets will come during early afternoon trading.
Today’s sale is actually more important for mortgage rates because the
securities are closer in term to mortgage bonds than yesterday’s sale was.
If investor demand was high, we should see the bond market recover some of
this morning’s losses, possibly leading to a small improvement in mortgage
rates during afternoon hours.
Tomorrow’s only relevant economic data is the revised reading to July's
University of Michigan Index of Consumer Sentiment just before 10:00 AM ET.
This index will help us measure consumer optimism about their own financial
situations and is considered relevant because rising consumer confidence
usually translates into higher levels of spending, which adds fuel to the
economic recovery and is looked at as bad news for bonds. Tomorrow’s release
is an update to the preliminary reading we saw two weeks ago, so unless we
see a drastic revision to the preliminary estimate of 83.9, I think the
markets will probably shrug this news off.
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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