How I See The Market

Wednesday’s bond market opened in positive territory, but has since given back those gains. The stock markets are flat with the Dow and Nasdaq each up a couple points. The bond market is currently down 3/32, but with yesterday’s weakness we will likely see an increase in this morning’s mortgage rates of approximately .125 - .250 of a discount point.

In the meantime the conditions in Egypt continue to worry Wall Street.  Although it is not reflected in the market itself, to any great degree, if the Muslim Brotherhood were to emerge from this chaosis, the Suez Canal could be a squeeze point for oil flows and cause the price of oil to skyrocket.  The next few weeks should tell the tale.

There is no relevant economic data scheduled for release today. There were a couple of non-governmental employment related reports posted this morning. They aren’t usually of much concern, but have drawn attention recently due to surprise readings and signs of strength in the labor market. Today’s reports did give results that are negative for bonds, indicating a decline in payoffs and a fairly sizable increase in new hires. That type of news hints that the labor market is gaining strength, making long-term securities such as mortgage related bonds less attractive to investors. However, their impact on this morning’s mortgage pricing has been minimal.

Tomorrow brings us the release of three reports worth watching. Employee Productivity and Costs data for the 4th quarter will be released early tomorrow morning. It can cause some movement in the bond market, but should have a minimal impact on mortgage pricing. If it varies greatly from analysts' forecasts of a 2.2% increase, we may see some movement in mortgage rates. However, the markets will be much more interested in Friday's major employment data, so a slight difference shouldn’t cause a noticeable movement in mortgage rates.

The Labor Department will give us last week’s unemployment figures early tomorrow morning. They are expected to show that 425,000 new claims for unemployment benefits were filed last week. This would be a sizable decline from the previous week and considered bad news for bonds and mortgage pricing.

December's Factory Orde rs data will be posted late tomorrow morning. It is similar to last week's Durable Goods Orders release in giving us a measurement of manufacturing sector strength, but this data includes new orders for both durable and non-durable goods. It is one of the less important reports of the week, but can influence mortgage pricing if it varies greatly from forecasts. Analysts are expecting a 0.6% decline in new orders, hinting at manufacturing sector weakness. Good news for the mortgage market would be a much bigger decline.

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... 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.