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Tuesday’s bond market has opened in negative territory
despite weaker than expected economic news and early stock
losses. The stock markets are showing losses again with the
Dow down 65 points and the Nasdaq down 13 points. The bond
market is currently down 2/32, but we will likely still see
an improvement of approximately .125 of a discount point in
this morning’s mortgage rates due to strength in bonds
yesterday.
The conference Board gave us this morning’s economic news.
They reported that March's Consumer Confidence Index (CCI)
fell to 107.2 this month, falling short of forecasts. They
also revised February’s final reading lower than previously
estimated. This indicates that consumers are less optimistic
about their own financial situations than previously
thought. This is good news for bonds and mortgage rates.
Today’s weakness in bonds comes from comments made by a Fed
member that raised inflation concerns. Cleveland Fed
President Sandra Pianalto said that inflation may not be
moderating as quickly as expected. This indicates that the
Fed may be more concerned about inflation risks than the
market thought. Since inflation erodes the value of a bond’s
future fixed interest payments, it is considered to be the
number one nemesis. Still, this comment came during a reply
to a question at a speaking arrangement in Prague and is not
an official Fed announcement so the impact has not been
significant.
Tomorrow’s relevant data is February’s Durable Goods Orders.
This report gives us a measurement of manufacturing sector
strength by tracking new orders for big-ticket items, or
products that are expected to last three or more years. This
data is known to be volatile from month to month but is
still considered to be of high importance. Analysts are
expecting it to show an increase in orders of approximately
3.5%. A larger increase would be considered a negative for
bonds and could lead to higher mortgage rates tomorrow
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... 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.
©Mortgage Commentary 2007
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