Monday's bond market has opened down slightly due mostly to a positive open for stocks. The stock markets are showing early strength with the Dow up 42 points and the Nasdaq up 11 points. The bond market is currently down 2/32, which should keep this morning's mortgage rates at Friday's levels.
Today's only relevant economic data was February's Personal Income & Outlays that was posted early this morning. It showed a 0.3% increase in spending that matched forecasts but no change in personal income. This means that income was smaller than many had thought and that spending levels did not surprise. This can be considered slightly favorable news for bonds because market participants were expecting to see a slight increase in income. That translates into a little less money to spend. However, these results are not having much of an influence on the markets or mortgage rates this morning.
March's Consumer Confidence Index (CCI) will be posted late tomorrow morning. This index gives us an indication of consumers' willingness to spend. Bond traders watch this data closely because consumer spending makes up two-thirds of our economy. If this report shows that confidence is falling, it would indicate that consumers are more apt to delay making large purchases. If the report reveals that confidence looks to be growing, we may see bond traders sell, pushing mortgage rates higher tomorrow morning. It is expected to show an increase from February's 46.0 reading to 50.0 for March.
Overall, I expect to see the most movement in rates either Thursday or Friday. Friday is the most important day of the week with the employment numbers being released, but we will likely see a fair amount of movement in rates Thursday morning also. In general, it will probably be pretty active week.
Also worth noting is that fact that the stock markets will be closed Friday in observance of the Good Friday holiday, but the bond market will open for trading until noon. This will likely create additional volatility in bonds Thursday afternoon and especially Friday morning. Accordingly, it would be prudent to maintain contact with your mortgage professional if still floating an interest rate.
©Mortgage Commentary 2010
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