Thursday’s bond market has opened down slightly with stocks in positive
ground and despite today’s economic data that showed slightly favorable
results. The stock markets are showing early gains with the Dow up 55
points and the Nasdaq up 7 points. The bond market is currently down 3/32,
which will likely push this morning’s mortgage rates higher by
approximately .125 of a discount point if comparing to yesterday’s morning
pricing.
The Labor Department announced early this morning that 350,000 new claims
for unemployment benefits were filed last week. This was a decline from the
previous week’s revised total of 362,000 initial claims, but higher than
the 341,000 that was expected. That indicates the employment sector
strengthened a bit last week, however, not as much as many had thought.
Therefore, we can consider the data neutral to slightly favorable for the
bond market and mortgage rates.
August's Goods and Service Trade Balance report was also posted at 8:30 AM
ET this morning. It revealed a trade deficit of $38.8 billion in August,
nearly matching forecasts of $38.6 billion. This data does not usually
directly affect bond trading or mortgage rates but does influence the value
of the U.S. dollar versus other currencies, which is fairly important to
international investors when buying or selling U.S. securities. This
morning’s report did not give us enough of a variance to be of any factor
in today’s bond trading or mortgage pricing.
Tomorrow has two pieces of economic data that could affect mortgage rates.
The Commerce Department will post Durable Goods Orders for September at
8:30 AM ET. This report gives us a measurement of manufacturing sector
strength by tracking orders at U.S. factories for big-ticket items, or
products that are expected to last three or more years such as appliances,
electronics and airplanes. Analysts are currently calling for an increase
in new orders of approximately 3.5%. If we see a much larger increase in
orders, mortgage rates will probably rise as bond prices fall. On the other
hand, a significantly weaker than expected reading should be good news for
the bond market and mortgage rates, but this data can be quite volatile
from month to month and is difficult to forecast. That means a small
variance from forecasts likely will have little impact on tomorrow’s
mortgage rates.
The week's last report comes just before 10:00 AM ET tomorrow when the
University of Michigan updates their Index of Consumer Sentiment for this
month. This report is moderately important because it helps us measure
consumer confidence, which is believed to indicate consumers' willingness
to spend. If consumers are more confident in their own financial and
employment situations, they are more apt to make a large purchase in the
near future. Since consumer spending makes up over two-thirds of the U.S.
economy, any related data is watch closely. Current forecasts show this
index falling from the preliminary reading of 75.2 to 74.5, meaning
confidence was not as strong this month as previously thought. That would
be good news for the bond and mortgage markets.
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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