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Brian Dawson

10-22-2012 Market Update

Monday, October 22, 2012 - Article by: Brian Dawson - Land Home Financial Services - Message


Monday's bond market has opened in negative territory even though stocks are starting the week off with minor losses. The Dow is currently down 43 points while the Nasdaq has slipped 2 points. The bond market is currently down 8/32, but I don't believe we will see little change in this morning's mortgage pricing due to strength in trading late Friday.

There is nothing of importance or concern scheduled for release today or tomorrow. This should help keep mortgage rates fairly flat until we get to the important events the mid-week. There are four economic reports and two relevant Treasury auctions for the bond market to digest in addition to another FOMC meeting. We can also expect to the stock markets to come into play, especially this afternoon and tomorrow with no relevant economic data scheduled for release.

Wednesday starts the week's agenda with the release of September's New Home Sales at 10:00 AM ET. This data covers the small percentage of home sales that last week's Existing Home Sales report didn't include and is this week's least important data. It is expected to show an increase in sales of newly constructed homes, but regardless of its results I am not expecting it to have a significant impact on mortgage rates Wednesday.

This week's FOMC meeting is a two-day meeting that begins tomorrow and adjourns Wednesday afternoon. There really is no possibility of the Fed changing key short-term interest rates this week. But market participants will be looking at the post-meeting statement for any indication of change in Fed sentiment or possibly further development on recent talk of them issuing certain targets in particular economic readings that would trigger an automatic increase in key short-term interest rates. This would eliminate most of the guessing in the markets of what it will take for the Fed to start raising those rates. The meeting will adjourn at 2:150 PM ET Wednesday, so look for any reaction to the statement to come during afternoon hours.

Overall, it will likely be a fairly calm early part of the week but very active latter part for the markets and mortgage rates. I believe that the single most important day will probably end up being Friday with the extremely important GDP release in the morning, but anytime there is an FOMC meeting there is a good possibility of seeing the markets move significantly. Accordingly, I strongly recommend maintaining contact with your mortgage professional this week if still floating an interest rate.

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