negative tone
Daily Mortgage Rate Lock Advisory – Thursday June 18, 2009
Thursday’s bond market has opened in negative territory as yesterday’s afternoon weakness continues into this morning’s trading. The stock markets are showing gains with the Dow up 82 points and the Nasdaq up 2 points. The bond market is currently down 17/32, which will likely push this morning’s mortgage rates higher by approximately .375 of a discount point over yesterday’s morning rates.
The Labor Department reported early this morning that 608,000 new claims for unemployment benefits were filed last week. This was slightly higher than what analysts had expected, but not enough of a difference to have much influence on mortgage pricing.
The Conference Board gave us today’s second piece of news with the release of its Leading Economic Indicators (LEI) for May. It revealed a 1.2% increase that exceeded forecasts and points towards a sharp increase in economic activity over the next three to six months. This is bad news for bonds because strengthening economic activity makes bonds less appealing to investors and leads to higher mortgage rates.
Yesterday’s morning rally in bonds was short-lived as trading turned sour as the day went on. What looked like a potentially wonderful day for mortgage shoppers ended up being a bad day. A combination of a couple of factors led to the selling, including a weakening dollar that makes U.S. securities less valuable to international investors. The negative tone has carried into this morning’s trading and with no important economic data this afternoon or tomorrow to stop the selling, we may see mortgage rates revise higher this afternoon and possibly tomorrow.
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…
Daily Rate Lock Recommendation – 06/10/2008 11:00:00 AM EST
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Tuesday’s bond market has opened in negative territory again as inflation concerns continue to hurt bonds and long-term securities that are sensitive to such issues. The stock markets are mixed with the Dow up 26 points and the Nasdaq down 12 points. The bond market is currently down 18/32, which will likely push this morning’s mortgage rates higher by approximately .375 – .500 of a discount point.
This morning’s only economic data isn’t the cause of today’s negative tone in bonds. April’s Goods and Services Trade Balance report gave us the U.S. trade deficit during that month. It showed a deficit of $60.9 billion that was higher than forecasts had called for. However, this data is not considered to be of high importance to the bond market and mortgage rates and therefore, has not influenced mortgage pricing this morning.
What caused this morning’s weakness was comments by Fed members, including Fed Chairman Bernanke that strongly hinted of a possible rate hike coming before another rate cut. The Fed is obviously concerned about inflation if they are talking rate increases, so mortgage related bonds are reacting negatively because they are extremely sensitive to inflation.
Later today, the Federal Reserve will release its Beige Book. This data details economic conditions throughout the U.S. by region. It is relied upon heavily by the Federal Reserve during FOMC meetings when determining monetary policy. If it shows slowing economic activity, the bond market may thrive and mortgage rates could drop shortly after the 2:00 PM ET release. If it reveals signs of inflation growing, we could see mortgage rates revise higher this afternoon.
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… Lock 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.
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