Archive for March, 2010

Daily Commentary Report for 03/29/10

Posted: March 29, 2010 in 1

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.

If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 days… Float 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…

Daily Commentary Report for 03/26/10

Posted: March 26, 2010 in 1

Friday’s bond market has opened flat again as traders look to quietly end a very volatile week. The stock markets are showing gains with the Dow up 45 points and the Nasdaq up 12 points. The bond market is nearly unchanged from yesterday’s close, which will likely keep this morning’s rates very close to yesterday’s levels.

The final revision to the 4th Quarter GDP did give us a little surprise. The final calculation shows a 5.6% annual rate of economic growth during the last three months of last year. This was a downward revision of 0.3%, meaning that economic activity was not as strong as expected. That can be considered good news for bonds and mortgage rates. However, a key inflation reading within the data was revised slightly higher than previously estimated. But, the age of the data and the fact that we will see fresh readings on the 1st quarter next month has prevented today’s results from having much of an impact on this morning’s mortgage rates.

The second report of the morning was the revision to the University of Michigan’s Index of Consumer Sentiment for March. It showed a reading of 73.6, indicting that surveyed consumers were more optimistic about their own financial situations than many had thought. This month’s initial reading was 72.5 and analysts were expecting to see a 73.0 reading this morning. Therefore, this data can be considered negative for bonds because it means consumers may be more willing to spend. Although, this report is not considered to be highly important so its impact on today’s mortgage rates has been minimal.

Next week is very active in terms of relevant economic reports being released. There are reports scheduled to be posted every day next week. They start with February’s Personal Income and Outlays data early Monday morning and conclude Friday with the almighty monthly Employment report. In between we have several releases scheduled that can influence mortgage rates also. It will be a holiday-shortened week for the stock markets, but not so much for the bond market. The stock markets will be closed Good Friday, but the bond market will open for a half day of trading. This means that the bond market will be able to react to Friday’s key data but the stock markets will have to wait until Monday. Look for Sunday’s weekly preview to detail next week’s events.

If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 days… Float 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…

23 March, 2010 22:23

Posted: March 23, 2010 in 1

Tuesday’s bond market has opened flat after this morning’s only economic data nearly matched forecasts. The stock markets are showing minor gains with the Dow up 24 points and the Nasdaq up 2 points. The bond market is nearly unchanged from yesterday’s close, but we will still likely see an improvement in this morning’s mortgage rates of approximately .125 of a discount point.

The National Association of Realtors reported late this morning that sales of existing homes fell 0.6% last month, which was very close to forecasts. That indicates that the housing sector remained fairly flat last month because this data tracks approximately 85% of all home sales in the U.S. Since this data is not considered to be highly important to the markets and it showed no significant surprises, its impact on this morning’s bond trading and mortgage rates has been minimal.

We have two reports scheduled for release tomorrow morning. The first is the most important on this week’s calendar, but is not considered to be one of the most important we see each month. The Commerce Department will release February’s Durable Goods Orders early tomorrow morning. It gives us a measurement of manufacturing sector strength by tracking new orders for big-ticket items, or products that are expected to last three or more years. This data is known to be volatile from month to month but is still considered to be of high importance. Analysts are expecting it to show an increase in new orders of approximately 0.6%. A larger increase would be considered negative for bonds as it would indicate economic strength and could lead to higher mortgage rates tomorrow morning.

We also get the sister report to today’s housing data- February’s New Home sales. This report tracks sales of newly constructed homes and usually has less of an influence on bond trading and mortgage rates than today’s Existing Homes Sales report did. In other words, it will take a large variance between its actual readings and forecasts for it to lead to changes in mortgage pricing. Current forecasts are expecting a small increase in sales from January’s level.

Also tomorrow is the first of two relatively important Treasury auctions that may also affect bond trading enough to change mortgage rates. There will be an auction of 5-year Notes tomorrow and 7-year Notes on Thursday. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions to mortgage rates. However, strong sales usually make bonds more attractive to investors and bring more funds into bonds. The buying of bonds that follows usually translates into lower mortgage rates. Results of the sales will be posted at 1:00 PM ET each day, so look for any reaction to come during afternoon hours.

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.

Daily Commentary Report for 03/22/10

Posted: March 22, 2010 in 1

Monday’s bond market has opened in positive territory as stocks react negatively to the healthcare bill and concerns about Greece again. The stock markets have opened slightly in negative ground with the Dow currently down 14 points and the Nasdaq down 3 points. The bond market is currently up 6/32, which will likely improve this morning’s mortgage rates by approximately .125 of a discount point.

There is no relevant economic data being posted today. The rest of the week brings us the release of five monthly and quarterly reports for the bond market to digest along with two relevant Treasury auctions, but today’s bond trading will likely be left up to the stock markets. If the major stock indexes fall from current levels, we should see more funds shifted into bonds and mortgage rates move lower later today.

The first data is February’s Existing Home Sales from the National Association of Realtors at 10:00 AM ET tomorrow. It will give us a measurement of housing sector strength and mortgage credit demand, but is usually considered to be of low importance to the financial markets. Its’ sister report- February’s New Home Sales, will be posted Wednesday morning. Since it is the day’s only data, it may influence bond trading enough to cause a slight change in mortgage rates, but it will take a large variance from forecasts for it to heavily influence rates. Current forecasts have tomorrow’s report showing a small decline in sales and Wednesday’s data showing a minor increase in sales.

Wednesday’s important data comes from the Commerce Department, who will post February’s Durable Goods Orders. This report gives us a measurement of manufacturing sector strength by tracking new orders for big-ticket items, or products that are expected to last three or more years. This data is known to be volatile from month to month but is still considered to be of high importance. Analysts are expecting it to show an increase in new orders of approximately 0.5%. A larger increase would be considered negative for bonds as it would indicate economic strength and could lead to higher mortgage rates Wednesday morning.

Overall, it is difficult to label one particular day as the most important of the week. The single most important report will likely be the Durable Goods Orders, but none of the week’s data has the potential to be a major market mover. If the stock markets move lower, we should see gains in bonds and improvements in mortgage rates. But, if stocks move higher, pressure in bonds is possible, leading to higher mortgage pricing. I suspect that this week will be a little calmer for mortgage rates than the past couple weeks have been, but I still recommend proceeding with caution if you are still floating an interest rate.

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…

Daily Commentary Report for 03/14/10

Posted: March 15, 2010 in 1

This week brings us the release of five relevant economic reports along with an FOMC meeting for the markets to digest. The first piece of data will come mid-morning tomorrow when February’s Industrial Production report is posted. This report measures manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is expected to show no change in output from January’s level. A decline would be considered favorable news for bonds and mortgage rates.

Tuesday’s only factual economic news is February’s Housing Starts, but it will likely not have much of an impact on mortgage rates. It gives us a measurement of housing sector strength and future mortgage credit demand, but is usually considered to be of low importance to the financial markets. It is expected to show a decline in new starts from January to February.

The big news Tuesday will be the FOMC meeting that will adjourn at 2:00 PM ET. It is widely believed that the Fed will make no change to key short-term interest rates at this meeting, but the post-meeting statement will be watched closely for any indication of when they will make a move. Generally speaking, the bond market wants to hear that inflation is not an immediate concern and that key rates will be kept at current levels for the near future. If the statement reassures traders that the Fed will not be raising rates anytime soon, we can expected the bond market to thrive and mortgage rates to move lower. However, if any hint of a move sooner than later could lead to bond selling and higher mortgage rates.

The Labor Department will post February’s Producer Price Index (PPI) early Wednesday morning. This index measures inflationary pressures at the producer level of the economy. There are two portions of the index- the overall reading and the core data. The core data is more important and watched more closely because it excludes more volatile food and energy prices. If the index shows a large increase, inflation concerns will rise, making long-term investments such as mortgage-related bonds less attractive to investors. This would lead to higher mortgage rates Wednesday morning. Current forecasts are calling for a 0.2% decline in the overall reading and a 0.1% increase in the core data.

February’s Consumer Price Index (CPI) will be released early Thursday, which measures inflationary pressures at the very important consumer level of the economy. Its results can definitely have a huge impact on the financial markets, especially long-term securities such as mortgage-related bonds. It is expected to show a 0.1% increase in the overall index and a 0.1% rise in the more important core data. If we see weaker than expected readings, bond prices should rise and mortgage rates would likely fall Thursday.

The Conference Board will post its Leading Economic Indicators (LEI) for February late Thursday morning. This index attempts to measure economic activity over the next three to six months. Current forecasts are calling for a 0.1% increase, indicating that economic activity will likely expand slightly in the coming weeks. A decline would be considered good news for the bond market and mortgage rates.

Overall, look for Thursday to be the most important day of the week due to the CPI release, but Tuesday’s FOMC meeting can also heavily influence the markets. Wednesday may also be an active day for rates with the PPI on tap. Friday will probably be the calmest day for mortgage rates, but it appears there is a good possibility of seeing plenty of movement in rates the next several days. Therefore, please proceed cautiously if still floating an interest rate.

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…

Daily Commentary Report for 03/12/10

Posted: March 12, 2010 in 1

Friday’s bond market initially opened in negative territory but has since moved into positive ground. The stock markets are mixed with the Dow up 18 points and the Nasdaq down 2 points. The bond market is currently up 2/32, but we will still see a slight increase in this morning’s rates of approximately .125 – .250 of a discount point.

This morning’s big news was February’s Retail Sales data from the Commerce Department. It showed a 0.3% increase in sales when a small decline was expected. Even if more volatile auto sales are excluded, sales exceeded forecasts by a wide margin. This led to the negative open in bonds and this morning’s increase in mortgage rates because the data indicates consumers were spending more than thought. That raises expectations of economic growth that usually makes bonds and long-term securities less appealing to investors.

The second report of the morning came from the University of Michigan who said their Index of Consumer Sentiment stood at 72.5 this month. This was lower than forecasts and means surveyed consumers were less optimistic about their own financial situations than many had thought. This is the good news of the morning because waning confidence usually means consumers are less likely to make a large purchase in the near future.

Next week will be fairly busy in terms of economic releases and events that may influence mortgage rates, particularly the middle days. There is nothing of relevance scheduled for Monday, but between Tuesday and Thursday we have a handful of economic releases, including two important inflation readings and another FOMC meeting. Look for details on next week’s events in Sunday’s weekly preview.

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…

Daily Commentary Report for 03/11/10

Posted: March 11, 2010 in 1

Thursday’s bond market has opened relatively flat with no highly important economic news being posted. The stock markets have opened with minor losses. The Dow is currently down 21 points while the Nasdaq has slipped 2 points. The bond market is nearly unchanged from yesterday’s close, but we will likely still see a slight improvement in this morning’s rates due to strength late yesterday.

There were two pieces of economic news posted this morning, but both are considered low importance. January’s Goods and Services Trade Balance reported a $37.3 billion trade deficit in January. This was much lower than expected however, the data is not important enough to directly affect bonds or mortgage rates. It does influence the value of the dollar versus other currencies, which in turn makes U.S. debt more or less attractive to foreign investors as the value of the dollar fluctuates. But it appears this morning’s data has not influenced mortgage rates.

The Labor Department gave us last week’s unemployment figures, saying that 462,000 new claims for unemployment benefits were filed last week. This was a decline from the previous week, but slightly higher than the 460,000 that was forecasted. But, since this report tracks only a week’s worth of claims, it usually takes a wide variance to affect mortgage pricing.

We also have the 30-year Bond auction to watch for today. Results of the sale will be posted at 1:00 PM ET. Yesterday’s 10-year Note auction actually went fairly well. The demand in the sale was much better than expected, but the rates that were bid for were higher than thought also. Overall, the sale can be considered pretty good, especially with the lackluster interest in recent auctions. This raises the possibility of seeing a successful 30-year Bond sale today and possible improvements in this afternoon’s mortgage rates.

There are also two reports scheduled for release tomorrow morning. The first is February’s Retail Sales data at 8:30 AM ET. This data is extremely important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, data that is related usually has a big impact on the financial markets. Tomorrow’s report is expected to show a decline of approximately 0.2%. If we get a larger than expected drop, the bond market should thrive and mortgage should move lower. But an increase in sales could lead to higher mortgage rates tomorrow.

The second report of the day will be the University of Michigan’s Index of Consumer Sentiment for March at 9:45 AM. This index gives us a measurement of consumer willingness to spend. If confidence is rising, then consumers are more apt to make large purchases. This helps fuel consumer spending and economic growth. A drop in confidence will probably hurt the stock markets and boost bond prices, leading to lower mortgage rates. If the index rises, indicating that confidence is rising and spending will likely rise, we may see mortgage rates move higher late tomorrow morning. It is expected to show a reading of 74.0, which is a slight increase from February’s final reading.

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…