Wednesday’s bond market has opened well into negative territory following a strong opening in stocks. The stock markets are rallying with the Dow up 150 points and the Nasdaq up 32 points. The bond market is currently down 28/32, which will likely push this morning’s mortgage rates higher by approximately .125 – .250 of a discount point.

There were no important economic reports scheduled for release this morning. The Fed will release its Beige Book at 2:00 PM ET today. This report details economic activity throughout the country by region. The Fed relies heavily on this data during their FOMC meetings, so look for a potential reaction during afternoon trading tomorrow. It probably will not cause a major sell off in the stock or bond markets, but could cause enough movement in bond prices to possibly improve or worsen mortgage rates slightly if it reveals any significant surprises.

There are two important reports scheduled for release tomorrow m orning. The first is the revised Productivity index for the 4th Quarter of last year. The preliminary reading posted last month showed a 3.2% increase in worker output. Analysts are expecting to see a sizable downward revision to the initial reading. It is expected to be cut to a 1.6% increase in output, meaning workers were not as productive as previously thought during the quarter. The Unit Labor Costs reading is expected to be revised higher to 3.4%. Employee productivity and costs are watched fairy closely because a higher level of output per hour is believed to mean that the economy can expand without inflation concerns, while increases in employee costs do raise inflation fears.

January’s Factory Orders will be posted late tomorrow morning, which will give us a measurement of manufacturing sector strength. This data is similar to last week’s Durable Goods, except this report covers orders for both durable and non-durable goods. Current forecasts are calling for a drop in new orders of approximately 2.1%. A larger than expected drop would be good news for the bond market and could lead to an improvement in mortgage rates.

We also will get weekly unemployment numbers from the Labor Department, but I am not expecting them to heavily influence bond trading or mortgage rates.

If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 days… Float 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.

Thursday’s bond market has opened in negative territory, continuing yesterday afternoon’s selling. The stock markets are also showing losses as they give back a good portion of yesterday’s gains. The Dow is currently down 154 points while the Nasdaq has lost 36 points. The bond market is currently down 8/32, which will push this morning’s mortgage rates approximately .125 – .250 higher than yesterday’s revised rates. This should equate to approximately .500 of a discount point higher than yesterday’s morning rates.

This morning’s economic data actually gave us favorable results. The Commerce Department said that new orders for big-ticket items, or Durable Goods, fell 2.6% last month. This was a larger than expected decline, but making the news even better was a significant reduction to November’s orders that was revised from down 1.0 to down 3.7%. This means that orders for products that are expected to last or more years were lower than expected. This is considered good news for bonds because it indicates a still weakening manufacturing sector.

December’s New Home Sales report was also posted this morning, revealing a sharp decline in sales of newly constructed homes. The 14.7% drop in December’s sales were the weakest level of sales since records started being kept on them in 1963. This indicates a still softening housing sector that is generally good news for bonds.

There are three reports scheduled for release tomorrow. The first is one of the most important reports that we see regularly. The initial reading of the 4th Quarter Gross Domestic Product (GDP) will be posted early tomorrow morning. This data is so important because it is considered to be the best measure of economic growth. The GDP itself is the total sum of all goods and services produced in the United States. Its’ results usually have a major impact on the financial markets and can cause significant changes in mortgage rates. There are three readings to each quarter’s activity, each released approximately one month apart. The first, which usually carries the most volatility, is expected to be a decrease of 5.4%. A weaker reading would be great news for the bond market, but the 5.4% decline would be the biggest quarterly drop in 26 years.

The 4th Quarter Employment Cost Index (ECI) is also scheduled for release early tomorrow morning. It measures employer costs for employee wages and benefits, giving us an indication of the threat of wage inflation. It usually has more of an effect on the bond market than the stock markets. Current forecasts are showing an increase of 0.7%. A lower than expected reading would be favorable to bonds and mortgage rates, but the GDP reading will be the biggest influence on trading and rates tomorrow morning.

The last report of the week is the revised reading to the University of Michigan’s Index of Consumer Sentiment. This index measures consumer co nfidence, which is thought to indicate consumer willingness to spend. I don’t see this data having much of an impact on the markets or mortgage rates due to the importance of the employment index and GDP figures. It is expected to show no change from the preliminary reading of 61.9.

If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 days… Float 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.

Tuesday’s bond market has opened flat after this morning’s economic data failed to show any major surprises. The stock markets are reacting similarly with the Dow down 16 points and the Nasdaq nearly unchanged from yesterday’s close. The bond market is also practically unchanged but we will still see an increase in this morning’s rates of approximately .250 – .375 of a discount point.

The first of today’s four reports was the final revision to the 3rd Quarter GDP that showed a 0.5% decline. This matched forecasts but was not likely to significantly impact mortgage pricing anyhow. The data is quite aged by now and next month we get the initial reading on this quarter’s activity, so analysts do not pay much attention to this version of the report unless it varies greatly from forecasts.

November’s Existing and New Home Sales reports were both posted this morning and both revealed larger than expected drops in sales. This indicates that the housin g sector is still softening and not near the ?floor? that many are attempting to predict. However, this is good news for bonds and mortgage rates because a weakening housing sector will make slow the economic recovery and keeps inflation fears to a minimal.

The last report of the day did reveal a higher than expected level of consumer sentiment. The University of Michigan’s Index of Consumer Sentiment for December was revised and showed a higher level of sentiment than the previous estimate. The reading of 60.1 means that consumers were more optimistic about their own financial situation than many had thought. This is considered bad news for bonds because rising sentiment means that consumers are more apt to make large purchase sin the near future. Still, this report ha snot had a significant impact ton today’s trading.

The last event of the day is the 5-year Treasury Note auction. If the sale is met with a decent demand from investors, we could se e interest in other notes and bonds such as mortgage-related bonds increase during afternoon trading. But, a lackluster interest from investors may also lead to weakness in bonds and possible upward afternoon revisions to mortgage pricing.

Tomorrow morning brings us the release of November’s Durable Goods Orders and the Personal Income and Outlays report. The Durable Goods Orders report tracks new orders for big-ticket items and is expected to show a drop of 3.1%. The Income and Outlays report is likely to show that personal income was unchanged from October and that spending fell 0.8% last month. Weaker readings would be good news for the bond market and mortgage rates.

Also worth noting is an early close tomorrow ahead of the Christmas Day holiday. The markets will be closed Thursday in observance of the holiday but will be open Friday. The bond market will close early Friday also. However, I am expecting to see a very quiet couple of days as many traders are home for the holidays.

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… 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.

Wednesday’s bond market has opened up slightly after this morning’s economic data failed to give us any surprises. The stock markets are posting gains with the Dow up 98 points and the Nasdaq up 14 points. The bond market is currently up 3/32, which will likely keep this morning’s mortgage rates close to yesterday’s levels.

Today’s big report was the initial reading to the 1st Quarter Gross Domestic Product (GDP). It showed that the economy grew at a 0.6% annual pace. This was slightly stronger than expected, but not enough to create concern in bonds. Offsetting that reading was a key inflation reading in the data that came in lower than expected. The result was this report having little impact on today’s bond market or mortgage rates.

The second report posted this morning was the 1st Quarter Employment Cost Index (ECI), which tracks employer costs for wages and benefits. It revealed a 0.7% increase that was slightly weaker than expected. This is good news for bonds and mortgage rates, however, traders seem to be waiting for this afternoon’s events before making any adjustments to their holdings.

This week’s FOMC meeting will adjourn 2:15 PM ET this afternoon. It is expected to yield a quarter point cut to key short-term interest rates. Assuming the Fed does make that move, the post meeting statement will be watched closely for any indication of the Fed’s next move, or a lack of one. There is some debate about whether the Fed will continue to cut rates or if they will go into a holding pattern due to concern about inflation.

I suspect that the post meeting statement is going to have some verbiage about inflation that will cause concern in the bond market. Accordingly, I am shifting to a lock recommendation for immediate and short-term periods. But, if this is a false alarm, I will be shifting back to a float recommendation this afternoon. Look for an update to this report shortly after the markets have a chance to react to the FOMC meeting results.

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.