Friday, November 15, 2013 - Article by: James Brooks -
By James Brooks
The stock markets are fairly calm also during early trading with the Dow up 24 points and the Nasdaq down 1 point. The bond market is currently unchanged from yesterday's close, but we will likely still see an improvement in this morning's mortgage rates of approximately .125 of a discount point due to strength late Thursday.
Yesterday's 30-year Treasury Bond auction didn't go nearly as well as Wednesday's 10-year Note sale did. A couple of the gauges we use to measure investor demand showed much weaker results than Wednesday's auction. That would be bad news for the bond and mortgage markets, but the reaction in afternoon trading and mortgage pricing was kept to a minimum yesterday.
We saw some gains in bonds late in the day yesterday, pushing the yield on the benchmark 10-year Treasury Note down to 2.70%. This morning's flat open in bonds has kept the yield at that relatively important level. If it does not break below 2.70% and stay below, there is a good possibility of seeing it rise back above 2.72% or even higher. Since mortgage rates tend to follow bond yields, this would translate into higher mortgage rates. Accordingly, please proceed carefully if still floating an interest rate and closing in the near future.
October's Industrial Production was posted at 9:15 AM ET this morning, revealing a 0.1% decline in output and U.S. factories, mines and utilities last month. This was a little weaker than the 0.1% increase that was expected, so it indicates that the manufacturing sector may have been softer than many had thought. That makes the data favorable for the bond market and mortgage rates, although this is only a moderately important piece of data.
Next week had several highly important economic releases scheduled that are likely to be influential to mortgage rates. They include two key inflation readings and a very important measurement of consumer spending in addition to the minutes from the most recent FOMC meeting. There are a couple of other reports due to be posted, but the most important ones are set for the middle part of the week.
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.
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