Tuesday's bond market has opened relatively flat with no relevant economic news scheduled for release today. The stock markets showing losses with the Dow down 150 points and Nasdaq down 26 points. The bond market is currently up 4/32, but we will likely still see an increase in this morning's mortgage rates of approximately .250 of a discount point due to weakness late yesterday.
With no relevant economic news being posted today, the stock markets are in the forefront and the biggest influence on bond trading this morning. If the major stock indexes continue to slide, we may see finds move back into bonds. However, I don't believe that we will see much of an improvement in mortgage rates today.
There are two reports scheduled for release tomorrow morning for the markets to watch. The first is the revised Productivity index for the 4th Quarter of last year. The preliminary reading posted last month showed an annual rate of 1.8% increase in worke r output. Analysts are expecting to see no revision to last month's initial reading. Employee productivity is watched closely because a higher level of output per hour is believed to mean that the economy can expand without inflation concerns.
January's Factory Orders will be posted late tomorrow morning, which will give us a measurement of manufacturing sector strength. This data is similar to last week's Durable Goods, except this report covers orders for both durable and non durable goods. Current forecasts are calling for a drop in new orders of approximately 2.5%. A larger than expected drop would be good news for the bond market and could lead to an improvement in mortgage rates.
Also worth mentioning about tomorrow morning is the release of the ISM Services index. This report often has little impact on the markets or mortgage rates. It is similar to yesterday's ISM Manufacturing index but tracks the service related sector. Last month's surpris e drop did cause some volatility in the markets, so if tomorrow's release also gives us a surprise we may see some additional movement in rates.
The Fed Beige Book will be posted tomorrow afternoon. This report details economic activity throughout the country by region. The Fed relies heavily on this data during their FOMC meetings, so look for a potential reaction during afternoon trading tomorrow. It probably will not cause a major sell off in the stock or bond markets, but could cause enough movement in bond prices to possibly improve or worsen mortgage rates slightly if it reveals any significant surprises.
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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