Monday’s bond market has opened in positive territory due early stock
selling. The major stock indexes are starting the week off well in negative
territory with the Dow down 121 points and the Nasdaq down 20 points. The
bond market is currently up 7/32, which should improve this morning’s
mortgage rates by approximately .125 of a discount point. Offsetting some
of this morning’s gains is weakness in bond trading from late Friday. Some
lenders revised pricing higher Friday afternoon while many chose to wait
until this morning’s open to reflect those bond losses.
This week has four pieces of economic data scheduled that was expected to
influence mortgage rates in addition to a couple Treasury auctions and the
minutes from the most recent FOMC meeting. However, none are scheduled for
today. We are seeing weakness in stocks, mostly a result of anxiety over
the lack of progress in Washington. That has helped boost bond prices
during early trading. As long as stocks remain near current levels, bond
prices and mortgage rates will likely follow suit.
With a resolution to the stalemate in Washington apparently not in the
immediate future (it now appears from Sunday political talk that both sides
are digging in deeper rather than becoming more flexible), the markets are
starting to reflect more concern about how much of an impact this will have
on both our economy and global economic growth. There now is talk by
members of Congress of letting the U.S. reach its default date (Oct 17)
without funding, which has some traders preparing for the worst. The impact
on the international markets would be fairly significant if this was to
happen, so some traders are beginning to make moves to protect themselves.
Whether this is simply a scare tactic to force a negotiation or a
calculated move that is a reality, it is a big change from just a week or
so ago when there was common talk of not letting that happen. The end
result is rising anxiety and stress in the markets that so far has been a
benefit to bonds and mortgage shoppers.
The relevant economic reports that are scheduled for release this week but
are unlikely to be posted are August’s Goods and Services Trade Balance
tomorrow and Friday’s release of September’s Retails Sales report and
Producer Price Index (PPI). Tomorrow’s Goods and Services trade Balance is
not considered to be of high importance to the markets, so it won’t be
missed. However, Friday’s data is considered to be key readings of consumer
spending and producer level inflation that could have been market-movers.
What we will see this week are the minutes from the most recent FOMC
meeting, which was the one that the Fed opted to delay the much-anticipated
tapering of their bond purchases. We also will get last week’s unemployment
numbers Thursday morning and the University of Michigan's Index of Consumer
Sentiment late Friday morning. The results of these will be magnified
because the government shutdown has significantly limited the release of
the economic data that was scheduled since the first of the month.
Overall, I see Wednesday as the key day of the week, although the most
movement in the markets and mortgage pricing will probably take place
during afternoon hours. We should see more movement in rates Thursday and
Friday also even though the reports of those days usually don’t draw high
levels of attention. It is the inability to get the key data that is
raising the stature of those reports. This could change if something
unexpected happens, such as a hint of a potential compromise in Washington
D.C. Since that does not appear to be likely in the immediate future, we
are left with the reduced activity calendar this week. Still, we can see a
fairly significant move in rates if it appears progress is being made in
Congress, so please proceed cautiously 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... 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