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Tuesday’s bond market has opened in negative territory, but with minor
losses. The stock markets are showing minor gains despite the government
shutdown that took effect last night. The Dow is currently up 8 points
while the Nasdaq is up 17 points. The bond market is currently down 5/32,
which will likely push this morning’s mortgage rates higher by
approximately .125 of a discount point.
The Institute for Supply Management (ISM) posted their manufacturing index
for September at 10:00 AM ET this morning, announcing a reading of 56.2.
This was an increase from August’s reading when analysts were expecting to
see a small decline. That means more surveyed executives felt business
improved during the month than many had thought, making the data negative
for the bond market and mortgage rates since it hints at a growing
manufacturing sector.
Tomorrow's only scheduled economic data is August's Factory Orders at 10:00
AM ET. However, it appears that we will not get this data since it comes
from the Commerce Department, who is a governmental agency. The Institute
for Supply Management is a private-sector group, so it is unaffected by the
government shutdown. Tomorrow’s data is not a big issue, but missing
Friday’s monthly Employment report that is considered key data is a
significant matter. That data is considered one of the most important pieces
of economic data we see each month, so missing it is certainly newsworthy
and the markets will be looking for it as soon as the government reopens
for business.
The Factory Orders report that was scheduled for tomorrow is a
manufacturing sector release that is similar to last week's Durable Goods
Orders, but also includes orders for non-durable goods. It can impact the
bond market enough to slightly change mortgage rates if it varies from
forecasts by a wide margin. Analysts are forecasting a 0.3% increase in new
orders, meaning manufacturing activity grew slightly in August. Good news
for the bond market and mortgage pricing would be a sizable decline in
orders, but we will not get the data until the shutdown comes to an end.
We are seeing somewhat of a muted response in the financial and mortgage
markets to the stalemate and shutdown. Maybe the general consensus is that
this is only temporary and will be resolved before we get to the point that
we cannot pay our bills in a couple weeks. There may be more to come if
this drags on longer than a couple days, especially if we get closer to the
October 17 date, when the government will run out of money to pay current
bills and interest payments if the debt ceiling is not raised. In other
words, this might just be the calm before the storm, hoping that Washington
is able to resolve the matter quickly.
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...
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