Monday, December 5, 2016 - Article by: James Brooks -
By James Brooks
The bond market is down 7/32 (2.40%), which should push today's mortgage rates higher by .125 of a discount point.
There is nothing set for release today that is likely to affect rates. The rest of the week brings us only three monthly or quarterly economic reports that have the potential to influence mortgage pricing and none of them are considered highly important. Still, we can expect to see the recent volatility and pressure in bonds continue despite a heavy economic calendar.
Tomorrow has two of the week's three reports, starting with revised 3rd Quarter Productivity numbers are posted at 8:30 AM ET. This index is expected to show a small upward revision from the preliminary reading of worker productivity. Higher levels of productivity are thought to allow the economy to expand without inflationary pressures rising. This is good news for the bond market because economic growth itself isn't necessarily bad for the bond market. It's the conditions around an expanding economy, such as inflation, that hurt bond prices and mortgage rates. Current forecasts are calling for an annual rate in productivity of 3.3%, up from the previous estimate of 3.1%. The higher the reading, the better the news for the bond market. Although, this report generally does not have a noticeable impact on mortgage pricing, so it will take a wide variance to draw much attention.
October's Factory Orders report will also be released tomorrow morning, but at 10:00 AM ET. This Commerce Department report is similar to the Durable Goods Orders report that was released the week before last, except this one includes manufacturing orders for both durable and non-durable goods. This release usually doesn't have a significant influence on bond trading since a good portion of the data has previously been made public. Analysts are expecting to see a 2.5% increase in new orders. The weaker the number, the better the news for bond prices and mortgage rates because it would signal softer than expected manufacturing sector activity.
Overall, I believe we may see a less active week for mortgage rates compared to the last couple weeks. However, that doesn't mean we won't see any movement in rates the next few days. Tomorrow is the busiest day with two of the three releases, but neither of them are considered to be highly important to the markets. We also will be watching political issues in Italy as it could affect the global markets. It is feared that the No vote on their referendum may put pressure on their banking system and government borrowing ability, which could create volatility in the international markets and global economy. In other words, despite the lack of important data set for release, it is still recommended that you maintain contact with your mortgage professional as the markets can get volatile at any time and without notice (as we have seen today).
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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