Market Commentary For August 3, 2010

Posted: August 3, 2010 in Uncategorized

Tuesday’s bond market has opened in positive territory after this morning’s economic data showed weaker than expected results. The stock markets are helping to boost bonds with a negative opening that is giving back some of yesterday’s strong gains. The Dow is currently down 55 points while the Nasdaq has fallen 11 points. The bond market is currently up 16/32, which will likely improve this morning’s mortgage rates by approximately .250 of a discount point.


There were two relevant economic reports posted this morning. The first was June’s Personal Income and Outlays data that revealed no change in both the income and spending readings. Analysts were expecting to see the flat reading in spending, but were calling for a slight increase in spending. This data indicates that consumers had no more income to spend, nor did they spend more than they did in May. These can be considered favorable results for the bond market and mortgage rates because they show weaker than expected economic activity that make long-term securities, such as mortgage-related bonds, more attractive to investors.


June’s Factory Orders data was also posted this morning. It showed that new orders for both durable and non-durable goods fell 1.2% in June. That was more than twice the decline that was expected, indicating a weaker manufacturing sector than many had thought. This is also good news for bond and mortgage rates. However, this particular report is not one of the more important ones we see each month, so its impact on this morning’s rates has been minimal.


There is no relevant economic data scheduled for release tomorrow. This will allow the stock markets to take center stage as the diving force for the bond market, at least until we get to Friday’s key data. If the major stock indexes show sizable losses tomorrow, expect to see bonds rise and mortgage rates to fall slightly. But if this morning’s losses are reversed, we could see upward changes to mortgage rates in the morning.


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…


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