How I See The Market

Friday’s bond market has opened well in positive territory despite no big surprises in today’s economic news and a flat open for stocks. The Dow and Nasdaq are both nearly unchanged from yesterday’s closing level. The bond market is currently up 20/32, which should improve this morning’s mortgage rates by approximately .250 of a discount point over yesterday’s morning pricing.

Egypt's geopolitical developments continue to make markets jittery.  With Mubarek stepping down, calm should be restored although we probably won't see the Egyptian Markets open for about another week or ten days.  In the meantime, adding to uncertainty in the markets worldwide, is the EU's bank problems.  Investors continue to worry about Greece's, Spain's, Portugal's, Ireland's, and Italy's ability to adopt the stringent economy measures needed for them to dig their way out of their tremendous debt situations.  With recent changes to the European Community's banking leadership, unknown elements are injected into the equation. 

December's Goods and Services Trade Balance data was this morning’s first economic news. It revealed a $40.6 billion trade deficit that was close to forecasts. Since this data is not known to be directly influential to mortgage rates and it nearly matched forecasts, it has had no impact on today’s mortgage pricing.

The second report of the day was February's preliminary reading to the University of Michigan’s Index of Consumer Sentiment. They announced a reading of 75.1 that was an increase from January’s final reading , but lower than forecasts had called for. This means that consumers were more optimistic about their own financial situations than last month, but not as much as was expected. Therefore, this data can be considered neutral to slightly positive for the bond market and mortgage rates.

Yesterday’s 30-year Bond auction did not go as well as Wednesday’s 10-year Note sale did, so we did see some pressure in bonds during afternoon trading. The bond auction wasn’t bad- more like average for recent 30-year sales. However, it was not as impressive as Wednesday’s sale, so it led to some selling late in the day.

Next week is much busier in terms of economic releases than this week was. There is nothing of importance scheduled for Monday, but there are six relevant reports due to be posted the middle part of the week, in addition to the minutes from the last FOMC meeting. Some of the economic data that is scheduled carries significant importance to the markets and mortgage rates, including two key inflation readings and a highly important consumer spending report. 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... 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.