Daily Mortgage Rate Lock Advisory

Rate Lock Advisory – Tuesday Mar. 10th

Tuesday’s bond market has opened in negative territory with stocks rallying behind favorable earnings news from Citigroup. The Dow is currently up 254 points while the Nasdaq has gained 60 points. The bond market is currently down 24/32, but I am expecting to see an increase in this morning’s mortgage rates of approximately .125 – .250 of a discount point.

The news that banking giant Citigroup was profitable the first two months of the year has led to rally in many sectors that have been hit hard due to economic and stability news. Whether or not this rally is the beginning reversal for stocks or if this is just a good day in a bad quarter remains to be seen. It will be interesting to see if the major indexes can hold this morning’s gains during afternoon trading and over the next few days. If not, look for more selling in stocks that could benefit bonds and mortgage rates. However, if they continue to rise, we may see pressure in bonds that lead to high er mortgage rates in the near future.

There is no relevant economic data scheduled for release again today. The rest of the week brings us the release of three economic reports for the bond and mortgage markets to digest along with 10-year Treasury Note and 30 year Bond auctions. The first will be held tomorrow with results posted at 1:00 PM. It is fairly common to see weakness in bonds right before the sales as trading firms prepare for them. If the auctions are met with a strong demand, that weakness is usually erased almost immediately.

The most important of the three reports will be posted Thursday morning when February’s Retail Sales data is released. This report is extremely important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, data that is related usually has a big impact on the financial markets. This month’s report is expected to show a decline in sales of a pproximately 0.4%. If it reveals a larger decline in sales, the bond market should rise and mortgage rates will likely fall. If it reveals an increase, I expect to see bond prices fall and mortgage rates rise Thursday morning.

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… This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
©Mortgage Commentary 2009

Thursday’s bond market has opened in positive territory following sizable stock losses. The stock markets are reacting to weak earnings news as the Dow fell 130 points and the Nasdaq lost 9 points. The bond market is currently up 16/32, which will likely improve this morning’s mortgage rates by approximately .250 – .375 of a discount point over yesterday’s morning rates.

The Labor Department gave us last week’s unemployment figures early this morning. They reported that 455,000 new claims for benefits were filed when analysts had predicted 420,000. This was a 6 year high for new claims and raises concerns that the employment sector is quickly weakening. This is good news for bonds and mortgage rates, however, since this data tracks only a week’s worth of filings it is not considered to be of high importance to the bond market.

Yesterday’s Treasury auction went fairly well and led to afternoon buying in bonds. Today’s sale will bring 30 year bonds to market and if investor demand is also strong we could see afternoon improvements in bonds again today. Results of the auction will be posted at 1:00 PM ET.

Employee Productivity and Costs data for the second quarter will be released early tomorrow morning. It will give us an indication of employee output. High levels of productivity are believed to allow the economy to grow without fears of inflation. I don’t see this being a big mover of mortgage pricing, but since it is the only data of the day it may influence rates slightly. Analysts are currently expecting to see an increase in productivity of 2.5%. A higher than expected reading could help improve bonds, leading to lower mortgage rates.

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… This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

Friday’s bond market has opened down slightly despite early stock losses and a weaker than expected consumer sentiment reading. The stock markets are reacting to earnings news with the Dow down 87 points and the Nasdaq down 30 points. The bond market is currently down 4/32, which should push this morning’s mortgage rates higher by approximately .125 of a discount point.

Today’s only economic data was the University of Michigan’s update to their Index of Consumer Sentiment for April. It showed a reading of 62.6 that was lower than forecasts. This is considered good news for bonds since it indicates consumers may be less apt to spend than previously thought, but since it is a revision it is considered only moderately important to the markets.

I am expecting a fairly quiet day in the bond market and mortgage rates. If any revisions were to come today, they would most likely be as a result of further stock weakness or a rebound in the stock indexe s. As long as they remain near their current levels, we should see mortgage rates follow suit the rest of the day.

Next week is extremely busy in terms of economic releases and related events. Monday is the only day of the week that there is not important economic data scheduled for release. We also have another FOMC meeting on the calendar, meaning we will see plenty of volatility in the markets next week. Look for more details on next week’s events in Sunday’s weekly preview.

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… This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

©Mortgage Commentary 2008