Market Update for February 14th

Thursday's bond market opened negative territory and has slipped further during morning trading. The stock markets are posting losses with the Dow down 117 points and the Nasdaq down 31 points. The bond market is currently down 11/32, which with yesterday's late weakness will likely push this morning's mortgage rates higher by approximat ely .375 of a discount over yesterday's morning rates.

Today's only monthly data was December's Goods and Services Trade Balance that came in at $58.8 billion. This was lower than expected and capped off the first annual decline since 2001. Unfortunately, this data is not considered to be of high importance to the bond market and mortgage rates, therefore, has had little impact on this morning's trading.

The Labor Department said that 348,000 new claims for unemployment benefits were filed last week. This was slightly lower than analysts had expected, however, that news has failed to move the markets or mortgage rates.

Fed Chairman Bernanke and Treasury Secretary Paulson both spoke to the Senate Banking Committee this morning in the semi-annual testimony on the status of the economy. They indicated there were current problems in the economy that threatened growth, but contradicted many analysts by predicting there would be no recession this year. Ev en though they did reiterate that the FOMC committee is ready to make further monetary policy moves if warranted, many traders took there comments to mean that there is a less likelihood of another rate cute at the next FOMC meeting.

January's Industrial Production data will be released tomorrow morning. It gives us a measurement of manufacturing sector strength by tracking output at U.S. factories. Mines and utilities and can have a moderate impact on the financial markets. Analysts are expecting to see 0.1% increase in production from December to January. A decline in output would be good news and should push bond prices higher, lowering mortgage rates tomorrow.

January's preliminary reading to the University of Michigan Index of Consumer Sentiment will also be released in the morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. If it shows an increase in consumer confidence, the stock markets may move higher and bond prices could fall. It is currently expected to fall from January's final reading of 78.4 to 76.5 for this month.

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.