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May 12th, 2014 3:40 PM

Monday’s bond market has opened in negative territory as stocks start the week off with noticeable gains. The Dow is currently up 92 points while the Nasdaq has gained 61 points. The bond market is currently down 7/32, which will likely push this morning’s mortgage rates higher by approximately .250 of a discount point is comparing to Friday’s morning pricing.

There is nothing of importance scheduled for release today. We are seeing stocks move higher (pushing bonds lower, yields and mortgage rates higher) this morning due to economic and geopolitical news from overseas. The rest of the week brings us the release of six economic reports that may have the potential to influence mortgage rates. Several of these reports are considered to be of elevated importance to the bond market and therefore mortgage rates. This raises the possibility of multiple days with fairly sizable changes to rates.

The first piece of data is April's Retail Sales at 8:30 AM ET tomorrow morning. This is an extremely important report for the financial markets since it measures consumer spending. Consumer spending makes up over two-thirds of the U.S. economy, so this data can have a pretty significant impact on the markets. Current forecasts are calling for a 0.3% increase in sales from March to April. A weaker than expected level of sales should push bond prices higher and mortgage rates lower tomorrow as it would signal that economic activity may not be as strong as thought. However, an unexpected increase could renew theories of economic growth that would lead to more stock buying and bond selling, pushing mortgage rates higher.

Overall, the most active day for mortgage rates will likely be either tomorrow or Thursday. Both have key economic data being posted that will attract plenty of attention in the bond market. We also need to watch stocks for mortgage rate movement. Generally speaking, stock weakness makes bonds more attractive while stock gains tend to draw funds from bonds, leading to higher mortgage rates (as we have seen this morning).

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.    


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Posted by Mark Brekhus on May 12th, 2014 3:40 PMLeave a Comment

August 15th, 2013 12:55 PM

Thursday’s bond market has opened down sharply even though this morning’s economic data didn’t show too many surprises. The stock markets are following suit with sizable losses of their own. The Dow is currently down 208 points while the Nasdaq has lost 59 points. The bond market is currently down 22/32, pushing the benchmark 10-year Treasury Note yield to 2.79%. This should equate to an increase in this morning’s mortgage rates of approximately .375 of a discount point.

Today’s three economic releases actually gave us mixed results. The most important of the three was July’s Consumer Price Index (CPI) at 8:30 AM ET. It revealed a 0.2% increase in both the overall reading and the core data that excludes more volatile food and energy prices. Those matched forecasts, meaning inflationary pressures rose slightly at the consumer level last month, but was within expectations. Therefore, we should consider the data neutral towards bonds and mortgage rates.

The second report at 8:30 AM also came from the Labor Department, who announced that 320,000 new claims for unemployment benefits were filed last week. This was well below the 339,000 that was forecasted and a sizable drop from the previous week’s revised total of 335,000 initial claims. This indicates the employment sector strengthened last week, making the data negative for the bond market and mortgage pricing. However, this data is not the cause of this morning’s selling as it tracks only a single week’s worth of new claims, limiting its impact on the financial and mortgage markets.

The good news came in July's Industrial Production report at 9:15 AM ET that showed output at U.S. factories, mines and utilities was unchanged from June to July when analysts were expecting to see a 0.4% increase in production. That is a sign of a weaker than expected manufacturing sector, which makes the data favorable for the bond market and mortgage rates. Unfortunately, it does not considered one of the more important monthly reports, preventing it from erasing this morning’s negative tone in bonds.

It appears that this morning’s weakness in both bonds and stocks and being fueled by more speculation about when the Fed will start tapering their current bond buying program (QE3). Apparently some analysts and traders believe that this morning’s economic data helps support the theory of the Fed easing their purchases next month during their next FOMC meeting. I don’t come away from this data with the same thoughts, but that means little in the daily markets. I still think that the Fed is going to need further economic growth to support the start of winding down QE3, not just status quo of the past several months. In fact, in my opinion there are some red flags and indicators that hint of new problems that make further economic growth less likely without help from the Fed. I strongly believe that Chairman Bernanke and friends need to get it right the first time and will not pull their support or stimulus until they are certain they won’t have to step back in again. I just don’t feel we are at that point yet.

Tomorrow also has three pieces of economic data scheduled for release, but none are considered to be highly important to mortgage rates. July's Housing Starts is the first at 8:30 AM ET, which will give us an indication of housing sector strength and future mortgage credit demand. It usually doesn't cause much movement in mortgage rates unless it varies greatly from forecasts. It is expected to show a fairly sizable increase in construction starts of new homes, pointing toward growth in the housing sector. The lower the number of starts, the better the news for the bond market, as it would indicate a weaker than expected housing sector.

Employee Productivity and Costs data for the second quarter will also be posted early tomorrow morning. It will give us an indication of employee output per hour. High levels of productivity are believed to allow the economy to grow without fears of inflation. I don't see this being a big mover of mortgage rates either, but it may influence rates slightly during morning trading. Analysts have predicted no change in productivity during the second quarter and a 0.3% decline in labor costs. A sizable increase in productivity and larger than expected drop in costs could help improve bond prices, contributing to lower mortgage rates tomorrow.

The final report of the week will come from the University of Michigan, who will release their Index of Consumer Sentiment for August at 9:55 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, helping fuel economic growth. By theory, a drop in confidence should boost bond prices, but this data is considered only moderately important. Analysts are expecting to see a reading of 85.2, which would be a slight increase from July's final reading of 85.1. The smaller the reading, the more concerned consumers are in their own financial situations and the better the news for mortgage rates.

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.


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Posted by Mark Brekhus on August 15th, 2013 12:55 PMLeave a Comment

August 13th, 2013 3:20 PM

Tuesday’s bond market has opened in negative territory even though stocks are showing losses. The Dow is currently down 67 points while the Nasdaq has lost 18 points. The bond market is currently down 19/32, which should push this morning’s mortgage rates higher by approximately .375 of a discount point over yesterday’s morning pricing.

The Commerce Department gave us today’s only relevant economic data with the release of July's Retail Sales numbers at 8:30 AM ET. They announced that retail-level sales rose 0.2% last month as expected. However, a secondary reading that tracks consumer spending excluding more volatile and pricey auto sale transactions rose 0.5% when analysts were calling for a 0.3% rise. In addition, a 0.2% upward revision to June’s sales is also pressuring bonds during early trading. The headline number would be neutral for the bond market and mortgage rates since it shows consumer spending rose modestly and at a pace that was not a surprise. The bad news for the mortgage market is the ex-auto number and the upward revision to June’s sales that indicates spending rose fairly rapidly during the month.

It is not really a surprise to see the bond market react negatively to this data as it the report that was expected to carry the most influence on trading and mortgage pricing unless the CPI later in the week shows a significant variance from forecasts. There also appears to have been a swing into a negative tone in bonds late yesterday as the morning’s gains were erased by closing, causing many lenders to revise pricing upward. Nothing of significance stands out as the reasons for it, which actually makes it a bit concerning. This morning’s economic news isn’t terribly strong, but the turn into negative ground during afternoon trading yesterday seems to be carrying into this morning’s session, boosted slightly by the data. It will be interesting to see if bonds extend their losses as the day progresses or if they remain near current levels.

Tomorrow also has important economic data for the markets to digest. July's Producer Price Index (PPI) at 8:30 AM ET is one of the week’s two key inflation readings, giving us an indication of inflationary pressures at the producer level of the economy. There are two readings in the report- the overall index and the core data reading. The core data is more important because it excludes more volatile food and energy prices that can change significantly from month to month. Current forecasts call for a 0.3% rise in the overall reading and a 0.2% increase in the core data. A larger increase in the core data could push mortgage rates higher tomorrow morning. If it reveals weaker than expected readings, we may see bond prices rise and mortgage rates improve as a result.

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.


Posted in:General
Posted by Mark Brekhus on August 13th, 2013 3:20 PMLeave a Comment

August 5th, 2013 10:13 PM

Monday’s bond market has opened in negative territory, erasing Friday’s late afternoon gains. The stock markets are starting the week in negative ground with the Dow down 64 points and the Nasdaq down 4 points. The bond market is currently down 8/32, but due to strength late Friday we should see little change in this morning’s mortgage rates if comparing to Friday’s early pricing.

There is nothing of importance scheduled for release today. In fact, this week is extremely light in terms of the number of mortgage-relevant economic reports. There is only one monthly report scheduled in addition to two Treasury auctions in the middle of the week that may influence mortgage rates. This makes it likely that stock movement will heavily influence bond trading and mortgage rates several days.

Tomorrow has the only monthly economic news of the week with the posting of June's Trade Balance. It gives us the size of the U.S. trade deficit but is considered to be of low importance to the bond market and usually has little impact on mortgage rates. Analysts are expecting to see a $43.4 billion trade deficit, but it will take a wide variance to directly influence mortgage pricing.

Also worth noting are several speaking engagements by multiple Fed members this week. These appearances are common and many go unnoticed on a regular basis. However, with no important economic data scheduled to drive bond trading and the broader financial markets, their words will draw even more attention than usual. Especially since last Friday’s Employment report disappointed many analysts and there is now more debate about when the Fed may start tapering their current bond-buying program (QE3). Any statements related to that topic during their speeches this week will become extremely newsworthy and could easily affect mortgage rates.

Overall, it is difficult to label one particular day as the most important with so little to choose from. And just about any day could be considered the lightest. I never recommend straying far from your mortgage professional if still floating an interest rate, however, the markets and mortgage pricing are likely going to be a bit more calm the next several days than they have been during recent weeks. That is unless, something unexpected happens, which is always a possibility.

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.


Posted in:General
Posted by Mark Brekhus on August 5th, 2013 10:13 PMLeave a Comment

July 31st, 2013 1:13 PM

Wednesday’s bond market has opened in negative territory following stronger than expected economic data and early stock strength. The same economic data is helping to boost stocks this morning, pushing the Dow higher by 113 points while the Nasdaq has gained 19 points. The bond market is currently down 20/32, which will likely push this morning’s mortgage rates higher by approximately .250 - .375 of a discount point over yesterday’s morning pricing.

There were two pieces of economic data posted this morning but the key report came at 8:30 AM when we got the initial reading of the 2nd Quarter Gross Domestic Product (GDP). It showed that the economy grew at an annual rate of 1.7% during the second quarter, exceeding forecasts of a 1.1% increase. This means the economy was stronger during the quarter, making the data negative for the bond market and mortgage rates. Since this report is considered to be the benchmark reading for economic activity and is highly important to the markets, it has caused the bond market to go into selling mode.

The second report of the day was 2nd quarter Employee Productivity and Costs data that revealed a 0.5% increase in worker productivity. This was just a bit higher than analysts were expecting, theoretically making it good news for mortgage rates. However, this was a minor variance in a moderately important report that was released at the same time as the GDP reading, so it has had little impact on this morning’s trading or mortgage pricing.

We also have this afternoon’s adjournment of another FOMC meeting that will likely lead to plenty of volatility in the financial and mortgage markets later today. This is not a meeting that will be followed by a press conference with Chairman Bernanke and is expected to yield no change to key interest rates. Although, there is a lot of speculation that the post meeting statement may clarify the Fed’s position or estimation of when they will begin to slow their current $85 billion monthly bond buying program (QE3). This topic has caused a firestorm in the markets multiple times over the past two months, and not always logically. Therefore, it is difficult to make a prediction of what to expect. Theoretically, we would like to hear something that would hint the Fed will not start tapering their purchases in September as many analysts currently believe.

One would think that since the current consensus has September when the Fed will start, hearing it again would not have a negative impact on the bond market. Unfortunately, logic and history does not seem to be a good indicator on how the markets will react to such news recently. That leaves us little to base a prediction on, other than to hold our breath and hope sanity quickly returns to the markets. The meeting will adjourn at 2:00 PM ET, so the fun should begin mid-afternoon. Look for an update to this report shortly after the markets have an opportunity to react to what is said. There is important economic data set for release tomorrow (ISM manufacturing index), but that will be covered in today’s afternoon revision.

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.


Posted in:General
Posted by Mark Brekhus on July 31st, 2013 1:13 PMLeave a Comment

July 26th, 2013 10:43 PM

Friday’s bond market has opened up slightly with stocks showing noticeable losses. The major stock indexes are well in negative territory during early trading. The Dow is currently down 94 points while the Nasdaq has lost 10 points. The bond market is currently up 3/32, but afternoon strength yesterday should improve this morning’s mortgage rates by approximately .125 - .250 of a discount point.

Yesterday’s 7-year Treasury Note auction went a little better than Wednesday’s 5-year Note sale. That news didn’t cause bonds to rally late yesterday, but it did contribute to them erasing their morning losses and moving into positive ground before closing. The rebound from yesterday and this morning’s gains have pushed the yield on the benchmark 10-year Treasury Note down to 2.56%. Unfortunately, as long as it is above 2.50% it is my opinion that the risk of mortgage rates moving upward still remains high. Therefore, please proceed cautiously if still floating an interest rate and closing in the near future.

There was one piece of economic data posted late this morning. The University of Michigan revised their Index of Consumer Sentiment for July just before 10:00 AM ET. They announced a reading of 85.1 that was its highest level in six years, indicating that surveyed consumers were more optimistic about their own financial situations than many had expected. Analysts were calling for a reading of 84.1, which was a slight increase from the preliminary estimate of 83.9 announced earlier this month. Because rising confidence in consumers usually means they are more apt to make a large purchase in the near future that fuels economic growth, we should consider this data negative for the bond market and mortgage rates. However, as expected, the news hasn’t had much of an influence on this morning’s trading or mortgage pricing.

Next week is extremely busy in terms of important economic data and other events that are likely to affect bond trading and mortgage rates. I show seven economic reports currently scheduled to be posted next week, including the initial Gross Domestic Product (GDP) reading for the second quarter, ISM manufacturing index and the monthly Employment report. In addition, we also have another FOMC meeting that will probably cause more volatility in the markets. The mortgage relevant events don’t start until Tuesday morning, so expect any weekend news and last minute portfolio adjustments ahead of the week’s calendar to drive bond trading and mortgage pricing Monday. Look for details on next week’s events in Sunday’s weekly preview.

Tomorrow’s only relevant economic data is the revised reading to July's University of Michigan Index of Consumer Sentiment just before 10:00 AM ET. This index will help us measure consumer optimism about their own financial situations and is considered relevant because rising consumer confidence usually translates into higher levels of spending, which adds fuel to the economic recovery and is looked at as bad news for bonds. Tomorrow’s release is an update to the preliminary reading we saw two weeks ago, so unless we see a drastic revision to the preliminary estimate of 83.9, I think the markets will probably shrug this news off.

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.


Posted in:General
Posted by Mark Brekhus on July 26th, 2013 10:43 PMLeave a Comment

July 25th, 2013 10:43 PM

Thursday’s bond market has opened in negative territory, extending yesterday’s selling. The stock markets are mixed yet again with the Dow down 56 points and the Nasdaq up 10 points. The bond market is currently down 11/32, which should push this morning’s mortgage rates higher by approximately .250 of a discount point.

The Commerce Department reported early this morning that new orders for durable goods or big-ticket products rose 4.2% last month. This was a larger than expected increase, indicating a stronger than predicted manufacturing sector. However, this data is known to be quite volatile from month to month and a secondary reading that excludes higher priced items such as airplanes and other transportation-related orders showed no change from May when analysts had forecasted a small increase. So, even though the headline number showed stronger than expected activity, the data hasn’t really had too much of an influence on this morning’s mortgage rates.

Also posted early this morning was the weekly unemployment update from the Labor Department. They announced that 343,000 new claims for unemployment benefits were filed last week, up from the previous week’s revised total of 336,000. Analysts were expecting to see an increase of 6,000 new claims. The variance wasn’t enough to cause any alarm or joy in the markets. In other words, we can consider the data neutral and uneventful for the bond market and mortgage rates.

Yesterday’s 5-year Treasury Note auction didn’t go very well with several benchmarks we use to gauge investor demand showing relatively weak interest. That doesn’t give us much to be optimistic about in today’s 7-year Note auction. Results will be posted at 1:00 PM ET, so any reaction in the bond and mortgage markets will come during early afternoon trading. Today’s sale is actually more important for mortgage rates because the securities are closer in term to mortgage bonds than yesterday’s sale was. If investor demand was high, we should see the bond market recover some of this morning’s losses, possibly leading to a small improvement in mortgage rates during afternoon hours.

Tomorrow’s only relevant economic data is the revised reading to July's University of Michigan Index of Consumer Sentiment just before 10:00 AM ET. This index will help us measure consumer optimism about their own financial situations and is considered relevant because rising consumer confidence usually translates into higher levels of spending, which adds fuel to the economic recovery and is looked at as bad news for bonds. Tomorrow’s release is an update to the preliminary reading we saw two weeks ago, so unless we see a drastic revision to the preliminary estimate of 83.9, I think the markets will probably shrug this news off.

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.


Posted in:General
Posted by Mark Brekhus on July 25th, 2013 10:43 PMLeave a Comment

July 11th, 2013 9:03 PM

Thursday’s bond market has opened well in positive territory, erasing losses from afternoon selling yesterday. The stock markets are showing fairly sizable gains with the Dow up 112 points and the Nasdaq up 33 points. The bond market is currently up 22/32, but due to weakness late yesterday we will probably only see an improvement in this morning’s mortgage rates of approximately .125 - .250 of a discount point if comparing to Wednesday’s morning pricing.

This morning’s bond strength is more a result of events late yesterday than it is of this morning’s economic data. Yesterday afternoon had three events that influenced bond trading and mortgage rates. As we headed into closing Wednesday, it appeared that the reaction was negative and many lenders revised pricing higher. However, as the markets closed and Fed Chairman Bernanke spoke at his scheduled engagement, the tone changed direction and it carried into overnight trading.

Yesterday’s 10-year Treasury Note auction didn’t go overly well or noticeably weak. More or less it was an average auction with some indicators pointing towards a decent level of investor interest and others contradicting that. Still, that gives us hope that today’s 30-year Bond auction will not go as bad as some had feared earlier in the week. If investor interest in the sale is high, we should see afternoon strength in bonds that lead to a slight improvement to mortgage rates. On the other hand, a lackluster demand could lead to higher rates later today. Results will be posted at 1:00 PM ET, so any reaction will come during early afternoon hours.

The second item yesterday afternoon was the 2:00 PM ET release of the minutes from the last FOMC meeting. They didn’t give us anything too significant that we didn’t already know. However, there were a couple of tidbits that drew some attention and initially led to weakness in bonds. The most glaring was that apparently nearly half of the FOMC members wish to completely end the Fed’s bond buying program (QE3) by the end of this year. At first glance that put the timetable ahead of the mid-2014 that was referenced in the post-FOMC meeting press conference last month. However, they also indicated further economic growth was needed to support any tapering of the program. In other words, the tapering is based on speculation of further economic growth, which actually isn’t really a surprise. The bottom line is that we didn’t learn anything that we weren’t already told last month, with exception to the growing number of members that preferred to end the program this year.

The final and most beneficial event was Fed Chairman Bernanke’s speech in Boston. His prepared words didn’t cause much of a reaction, but during the Q&A portion of the event he reiterated that the U.S. economy still needs assistance and is benefiting from the Fed’s low interest rates and stimulus. This wasn’t anything surprising, however, just hearing him say it eased some concerns in the markets and helped boost bond prices during overnight and morning trading.

This morning’s only economic news gave us favorable results although the markets have not moved much since the release. The Labor Department announced early this morning that 360,000 new claims for unemployment benefits were filed last week. This was well above expectations of 345,000 and the previous week’s revised total of 344,000 initial claims. That indicates that the employment sector softened last week, making the data good news for the bond market and mortgage rates.

Tomorrow morning has two pieces of relevant economic data scheduled for release. The first is June's Producer Price Index (PPI) from the Labor Department at 8:30 AM ET. It is a very important release because it measures inflationary pressures at the producer level of the economy. It is expected to show a 0.3% increase in the overall reading and a 0.1% increase in the core data reading. The core reading is the more important of the two because it excludes more volatile food and energy prices, revealing a more reliable inflation reading. The bond market should react favorably if we get weaker than expected readings, but a larger than expected rise in the core reading could send mortgage rates higher.

The final report of the week is the University of Michigan's Index of Consumer Sentiment. This index is released in a preliminary form each month and then followed up two weeks later with a final reading. The preliminary reading for July will be posted just before 10:00 AM ET tomorrow and is expected to rise from June's final reading of 84.1 to 85.0. This would indicate that consumers were a little more comfortable with their own financial situations this month than last month. It is believed that if consumers are confident in their own finances, they are more apt to make large purchases in the near future. And with consumer spending making up over two-thirds of our economy, investors pay close attention to reports such as these. So, a decline in confidence would be good news for mortgage rates because it means many consumers will probably delay making a large purchase in the immediate future, limiting economic activity.

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.


Posted in:General
Posted by Mark Brekhus on July 11th, 2013 9:03 PMLeave a Comment

July 8th, 2013 8:38 PM

Monday’s bond market has opened well in positive territory, although well short of erasing Friday’s sell-off. The stock markets are starting the week in positive ground also with the Dow up 114 points and the Nasdaq up 12 points. The bond market is currently up 17/32 however, we will still see a noticeable increase in this morning’s mortgage rates if comparing to Friday’s morning pricing. Late selling Friday extended the morning’s bond losses significantly and caused most lenders to revise their pricing higher during afternoon trading, many of which revised more than once. Today’s early gains have helped to recover a good portion of those losses from late Friday, but we will still likely see an increase in pricing if comparing to Friday’s early rates.

There is nothing of significance scheduled for today or tomorrow. The rest of the week brings us the release of two relevant economic reports for the bond market to digest in addition to the minutes from the last FOMC meeting and two fairly important Treasury auctions. Only one of the economic reports is considered to be of high importance and everything on the week’s calendar will come during the middle and latter days of the week. This means we are likely to see the most volatility in mortgage pricing between Wednesday afternoon and Friday morning.

There are also some heavily watched corporate earnings releases scheduled for the stock markets this week that can influence bond trading and therefore, mortgage pricing several days. They start this afternoon with the release of Alcoa’s earnings after the market closes. This company isn’t necessarily important to gauging economic strength, but it is the first Dow component company that posts earnings each quarter. Since it is the first look into Dow-related earnings, it draws plenty of attention in the markets. Generally speaking, weaker corporate earnings reports translates into stock selling that should make bonds more attractive to investors. As bond prices rise, yields fall and mortgage rates usually follow bond yields.

The events we will be watching this week start Wednesday with the first of two important Treasury auctions (10-year Notes) and the minutes from the most recent FOMC meeting. Both are afternoon events at 1:00 PM and 2:00 PM ET respectively, so any reaction in mortgage rates will come during afternoon hours. There are also two monthly reports scheduled for Friday morning (Producer Price Index and University of Michigan Consumer Sentiment index) that are likely to affect bond trading and mortgage rates.

Overall, it is difficult to try to label one particular day as the most important this week. Tomorrow could be the least important with no economic events scheduled. As mentioned a couple times recently, I would be extremely cautious floating an interest rate until the yield on the benchmark 10-year Treasury Note nears 3.00%. Today’s gains have lowered it to 2.67% from Friday’s 2.71%, but there is still room for further selling in bonds that will continue to pressure mortgage rates. The single most important day for the bond market is either Wednesday due to the 10-year Note auction and the release of the FOMC minutes or Friday morning when the two most important economic reports of the week will be posted. Accordingly, I strongly recommend maintaining 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... 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.


Posted in:General
Posted by Mark Brekhus on July 8th, 2013 8:38 PMLeave a Comment

July 1st, 2013 10:14 PM

Monday’s bond market has opened in negative territory due to this morning’s economic data giving us unfavorable results. The stock markets are in rally mode with the Dow up 158 points and the Nasdaq up 47 points. The bond market is currently down 5/32, but we should still see an improvement of approximately .250 of a discount point in this morning’s mortgage rates due to strength in bonds late Friday.

The Institute of Supply Management (ISM) gave us today’s only relevant economic data with the release of their June manufacturing index at 10:00 AM ET this morning. This index measures manufacturer sentiment by surveying trade executives on current business conditions. It revealed a reading of 50.9 that exceeded forecasts of 50.5, indicating manufacturer sentiment strengthened a little last month. More importantly than the larger than expected increase is that fact that it rose above 50.0. That threshold is considered the benchmark for manufacturing growth. Anything below 50.0 points to a softening manufacturing sector.

Tomorrow also has only one report worth watching. That would be May's Factory Orders data from the Commerce Department late tomorrow morning. This report is similar to the Durable Goods Orders report that was released last week, but tracks orders for both durable (electronics, appliances, autos, etc) and non-durable goods (food, clothing, etc). It usually doesn't have as much of an impact on the bond market as the durable goods data does, but can lead to changes in mortgage pricing if it varies greatly from forecasts. Current expectations are showing a 2.0% increase in new orders from April's levels, pointing towards sector strength. A decline in orders would be considered good news for the bond market and could help lower mortgage rates slightly tomorrow.

Overall, this is likely going to be a fairly active week for the financial and mortgage markets. The most important day of the week is Friday with the almighty monthly Employment report being released that day. The least important will probably be tomorrow or Wednesday morning, although we may see some volatility Wednesday afternoon as the markets close early ahead of July 4th on Thursday when the markets will be closed. I strongly recommend maintaining contact with your mortgage professional if still floating an interest rate as we may see some relatively strong volatility without warning.

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.


Posted in:General
Posted by Mark Brekhus on July 1st, 2013 10:14 PMLeave a Comment

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