Market Commentary for Tuesday, September 28, 2010

Posted: September 28, 2010 in Uncategorized

Tuesday’s bond market has opened in positive territory following early stock losses and weaker than expected economic news. The stock markets are showing moderate losses with the Dow down 52 points and the Nasdaq down 24 points. The bond market is currently up 12/32, which should improve this morning’s mortgage rates by approximately .250 of a discount point.

 
 

The Conference Board gave us today’s only economic data during late morning trading. They announced that their Consumer Confidence Index (CCI) for September fell to a 7 month low of 48.5. This was well below forecasts and good news for the bond market because waning confidence mean consumers are less apt to make large purchases in the near future. This limits the likelihood of economic growth, making long-term investments such as mortgage-related bonds more attractive to investors.

 
 

Also today is the first of two Treasury auctions that may influence mortgage rates. 5-year Notes will be sold today with results being posted at 1:00 PM ET. These securities are not directly tied to mortgage rates, but the sale will give us an indication of investor appetite for U.S. debt. If the sale was met with a strong demand from investors, the broader bond market should react positively this afternoon, possibly leading to a downward revision to mortgage rates later today.

 
 

There is no relevant economic data scheduled to be posted tomorrow, but we do have the 7-year Note sale to digest. This sale is closer to mortgage debt than today’s sale is, so we can expect a more direct impact on mortgage pricing than today’s results. We can also expect the stock markets to play a major role in which direction bonds and mortgage rates move tomorrow.

 
 

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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