Wednesday's bond market has opened in positive territory following early stock weakness. The stock markets are showing sizable losses that are likely to get larger before the end of the day. The Dow is currently down 89 points while the Nasdaq has lost 42 points. The bond market is currently up 15/32, which will likely improve this morning's mortgage rates by approximately .250 of a discount point.
The National Association of Realtors reported this morning that home resales fell over 8% last month. This was the largest monthly decline on record and indicates that the housing sector is still rapidly weakening. This basically is good news because soft housing numbers are thought to be a drag on overall economic activity. It generally does not influence bond trading, but due to the size of the drop, today's news has helped boost bond prices.
Tomorrow morning, the Commerce Department will post Durable Goods Orders for September. This is the week's most important data. It gives us a measurement of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items. Analysts are currently calling for an increase in new orders of approximately 1.5%. If we see a larger than expected rise in orders, mortgage rates will probably rise as bond prices fall. A weaker than expected reading should be good ne ws for the bond market and mortgage rates, but this data can be quite volatile from month to month and is difficult to forecast.
Also tomorrow are weekly unemployment figures from the Labor Department and New Home Sales from the Commerce Department. Neither are considered to be very important since the unemployment numbers track only a week's worth of claims and the home sales report covers only approximately 15% of all home sales in the U.S. The Durable Goods Orders data will be the biggest influence on bonds and mortgage rates tomorrow morning.
The Treasury auction is also tomorrow, when 5-year Notes will be sold. This will help gauge investor interest in bonds and could lead to a bond rally or selling. Results of these sales are posted at 1:00 PM ET, so any impact on trading and mortgage rates will come during afternoon hours. If investor demand was strong, we should see bond prices rise and mortgage rates move lower. However, a lackluster interest fro m investors could lead to high mortgage rates tomorrow 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... 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.
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