How I See The Market

Tuesday’s bond market has opened in negative territory with no relevant economic data scheduled for release and the stock markets showing early gains. The Dow is currently up 58 points while the Nasdaq has gained 10 points. The bond market is currently down 14/32, which will likely push this morning’s mortgage rates higher by approximately .125 of a discount point. Strength in bonds late yesterday is limiting this morning’s increase in rates.

In the meantime, Portugal's Finance Minister says Portugal won't need 5to ask EU for financial assistance.  With Greek 6 month bonds selling at 4.9%, and Ireland first saying they wouldn't need help, but then did, it's hard to believe Portugal understand the scope and depth of its problem.  Even if Portugal can some how get their politicians to push through economic reforms, the politics of doing so may be more severe than the voters are willing to tolerate.  As all of this unfolds, America's Wall Street oracles have projected little impact of Europe's soverign problems on our economy.

There is again no relevant economic data scheduled for release today. Tomorrow begins a fairly active three days in terms of economic releases and events that are relevant to mortgage rates. There is nothing of importance happening tomorrow morning, except for the 10-year Treasury Note auction. It is common to see some pressure in bonds ahead of these types of sales as firms that are participating adjust their holdings to prepare for the auction. This may lead to a negative open in the bond market tomorrow since the benchmark security of the bond market is the 10-year Note, but the impact on morning mortgage rates should be fairly minimal.

10-year Notes are being sold tomorrow while 30-year Bonds will go to auction Thursday. Tomorrow’s sale is the more important of the two as it will give us a better indication for demand of mortgage-related securities. If the sales are met with a strong demand from investors, we should see the bond market move higher during afternoon hours. But a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader bond selling. The selling in bonds would result in upward revisions to mortgage rates.

The Federal Reserve will release its’ Beige Book report at 2:00 PM ET tomorrow. This report, which is named simply after the color of its cover, details economic conditions throughout the U.S. by region. Since the Fed r elies heavily on it during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any surprises, particularly regarding inflation, unemployment or future hiring. However, it is common for this release to have no impact on the markets or mortgage rates if nothing of importance is revealed.

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.