Wednesday's bond market has opened well into negative territory again despite weaker than expected economic data. The stock markets are showing strong gains again with the Dow up 175 points while the Nasdaq has gained 58 points. The bond market is currently down 16/32, which will likely push this morning's mortgage rates higher by approximately .250 of a discou nt point.
The Commerce Department said this morning that new orders for big-ticket items fell 0.4% last month when analysts had expected no change from September's levels. This indicates that the manufacturing sector was weaker than expected. Also worth noting is that this was the third consecutive monthly decline in orders. This news is favorable to bonds, but the attention that stocks are getting has prevented a rally in bonds.
October's Existing Home Sales data was also posted this morning. It showed that home resales fell more than forecasted last month. This is generally good news for bonds, but this data usually doesn't have much of an impact on bonds or mortgage rates unless it varies greatly from forecasts.
This afternoon brings us the release of the Fed "Beige" Book. This report, which is named simply after the color of its cover, details economic activity throughout the U.S. by region. Signs of economic weakness should not come as a surpris e to the markets and probably will not have had much of an impact on rates. But, the Fed does rely heavily on this data during their FOMC meetings, so any significant surprises could affect afternoon bond trading and possibly lead to changes in mortgage pricing this afternoon.
Tomorrow morning brings us the first revision to the 3rd Quarter Gross Domestic Product (GDP) reading. The GDP revision is expected to show an upward change from last month's preliminary reading of 3.9%. Current forecasts call for a reading of approximately 4.9%, meaning that there was more economic growth during the third quarter than previously thought. This is bad news for the bond market and mortgage rates, but the current mortgage rates are reflective of the expected revision. If it happens to show a reading of less than 4.9%, we should see the bond market improve and mortgage rates fall early tomorrow.
Also scheduled for release is October's New Home Sales report, but I don't expe ct it to affect mortgage rates tomorrow.
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.
Please let me know if I can provide loan information for any of your clients. I would be happy to quickly pre-qualify them, provide loan scenarios, or help improve their credit position to obtain a lower interest rate.
I am here to provide you and your clients with exceptional service in a courteous and respectful manner.