Mortgage Market Watch

Today's Advisory - 9-15-2009
September 15th, 2009 1:16 PM
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Tuesday's bond market initially opened well in negative territory after this morning's economic data revealed stronger than expected results but has since recovered a good portion of those losses. The stock markets are showing minor gains with the Dow up 4 points and the Nasdaq up 6 points. The bond market is currently down 3/32, but well above earlier levels. This will likely push this morning's mortgage rates higher by approximately .125 of a discount point.

The Commerce Department announced this morning that sales at retail level establishments rose 2.7% last month, greatly exceeding analysts' forecasts of a 1.9% increase. Even when volatile auto transactions are excluded, sales were well above forecasts. This means that consumers spent much more last month than many had thought. That is bad news for bonds and mortgage rates because consumer spending makes up two-thirds of the U.S. economy.

The second important piece of data posted this morning also did not due much good for bonds. The Labor Department reported that August's Producer Price Index (PPI) rose 1.7%, more than twice the increase that was expected. The more important core data reading that excludes more volatile food and energy prices came in up 0.2% when it was expected to rise 0.1%. This means that prices at the producer level of the economy rose more rapidly than analysts had thought. That is also bad news for bonds because rising inflation erodes the value of a bond's future fixed interest payments and makes them less appealing to investors. The result of rising inflation is usually higher mortgage rates. In addition, today's PPI reading raises concern about tomorrow's CPI report that is even more important than this morning's release.

August's Consumer Price Index (CPI) will be released early tomorrow morning. The CPI is one of the most important reports we see each and every month. It is the sister report of today's PPI and is considered to be a key indicator of inflation at the consumer level of the economy. As with the PPI, there are two readings in the report- the overall index and the core data reading. Current forecasts are calling for a 0.3% increase in the overall reading and a 0.1% rise in the core data reading. A larger increase in the core data would likely lead to higher mortgage rates tomorrow morning.

Also scheduled for tomorrow morning is August's Industrial Production data. This report gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is considered to be moderately important but could help change mortgage rates if there is a significant difference between forecasts and the actual reading. Analysts are currently expecting to see a 0.7% increase in production. A higher level of output could lead to higher mortgage rates, while a weaker than expected figure would be considered good news for bonds and rates.

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.
Posted by Scott Shinn on September 15th, 2009 1:16 PMPost a Comment (0)

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Today's Advisory - 9-30-2009
September 30th, 2009 1:03 PM
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Wednesday's bond market has opened flat despite early stock weakness. The stocks markets are posting noticeable losses with the Dow down 83 points and the Nasdaq down 15 points. The bond market is nearly unchanged from yesterday's closing level, but we should still see an improvement in this morning's mortgage rates of approximately .250 of a discount point due to strength late yesterday.

Today's only relevant economic data was the final revision to the 2nd Quarter Gross Domestic Product (GDP). It showed a revised reading of a 0.7% decline that was stronger than expected. The last revision revealed a 1.0% drop in GDP, meaning the economy was stronger last quarter than many had thought. Theoretically, this is negative news for bonds because stronger economic activity makes long-term securities such as mortgage-related bonds less attractive to investors. However, this data is so aged now that it has not had much of an impact on trading this morning or today's mortgage rates.

This morning's speech by Atlanta Federal Reserve Bank President Dennis Lockhart gave us a bit of interesting news. It appears that not all Fed members agree about certain actions taken by them to head off the crisis in the markets and to boost economic activity and their exit plan from those moves. But none of his comments are concerning. His outlook on the economy was in line with the general consensus- cautious optimism and concern about the housing and labor markets particularly. I don't believe his comments affected trading or mortgage pricing this morning.

Tomorrow morning brings us the release of two important economic reports. The first is August's Personal Income and Outlays at 8:30 AM ET. It gives us an indication of consumer ability to spend and current spending habits. This is important to the markets because consumer spending makes up two-thirds of the U.S. economy. Rising income generally indicates that consumers have more money to spend, making economic growth more of a possibility. This is negative news for the bond market and mortgage rates because it raises inflation concerns, making long-term securities such as mortgage related bonds less attractive to investors. It is expected to show a 0.1% rise in income and a 1.1% increase in spending due to auto sales.

The Institute for Supply Management's (ISM) September manufacturing index is the second. It will be released at 10:00 AM ET tomorrow morning. This index gives us an indication of manufacturer sentiment. Analysts are expecting an increase to 54.0 from last month's 52.9 reading. The 50.0 benchmark is extremely important because a reading above that level means more surveyed executives felt business improved than those who said it had worsened. This data is important not only because it measures manufacturer sentiment, but it is also very recent data. Some economic releases track data that are 30-60 days old, but the ISM index is only a few weeks old. If we get a smaller than expected reading, I expect to see the bond market rally and mortgage rates fall tomorrow morning.

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.
Posted by Scott Shinn on September 30th, 2009 1:03 PMPost a Comment (0)

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Today's Advisory - 9-28-2009
September 28th, 2009 11:43 AM
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Monday's bond market has opened up slightly despite strong stock gains. The stock markets are rallying with the Dow up 126 points while the Nasdaq has gained 41 points. The bond market is currently up 4/32, which should improve this morning's mortgage rates by approximately .250 of a discount point.

There is no relevant economic news scheduled for release today. Tomorrow starts this week's fairly busy calendar with the first release September's Consumer Confidence Index (CCI) at 10:00 AM ET. This Conference Board index gives us a measurement of consumer willingness to spend. It is expected to show an increase from last month's reading, indicating that consumers are more optimistic about their own financial situations than last month and more likely to make large purchases in the near future. This is bad news for the bond market and mortgage rates because consumer spending fuels economic growth. Analysts are calling for a reading of approximately 57.0, up from August's 54.1. If we see a larger than expected increase, the bond market should move lower and mortgage rates move higher tomorrow.

Wednesday's sole report is the final revision to the 2nd Quarter Gross Domestic Product (GDP). Since this data is aged now and the preliminary reading of the 3rd Quarter GDP will be released next month, I don't see this revision having much of an impact on the financial markets or mortgage pricing. It is expected to show a slight downward revision from the previous estimate of a 1.0% decline in GDP.

Overall, it is likely going to be a very active week in the markets and mortgage rates. The most important day will be Friday due to the employment report being scheduled, but tomorrow and Thursday's data can also fairly heavily influence mortgage rates. I would recommend maintaining contact with your mortgage professional the next several days.

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.
Posted by Scott Shinn on September 28th, 2009 11:43 AMPost a Comment (0)

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Today's Advisory - 9-25-2009
September 25th, 2009 11:35 AM
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Friday's 4.5% Fannie Mae bond is trading virtually flat and as a result mortgage interest rates are unchanged from yesterday's close.

Remember, stocks and bonds compete for investment capital, so as stocks improve, bond prices typically fall.  There is an inverse relationship between bond prices and yields, so as the bond price increase, the yield decreases and rates improve.

The markets have a had two important pieces of information to digest this morning:

1. Durable goods orders fell in August by 2.4%, the largest drop since January.  http://tinyurl.com/y8el3mr  Economists surveyed had expected a .07% gain and the news has had a dampening affect on stocks.  The DOW is now -17 and the S&P -2.

2. Consumer sentiment as gauged by the University of Michigan's Consumer Sentiment Survey rose to a revised 73.5 up from 65.7 in August. http://tinyurl.com/ybokjz3

So the offsetting reports have put a damper on stocks and have bonds moving sideways.

What does this mean for mortgage rates?

Take a quick look at the bond page.  It's very important to interpret this information correctly and not hope for the unrealistic.  The bond price is in a great spot, trading 24 basis points above the 200 day moving average.  But note that the bond has moved up and touched resistence at 101.09 and retreated and will likely, given the direction of stocks, remain between the 200 day moving average and resistance.  The 200 day moving average, as you can see from the bond chart is now on a sideways path and the bond price will not trade for long in a range well above that average.

That means that now, just like yesterday, is the time to lock and take advantage of this improvement in bond prices and mortgage interest rates.

If I were closing in the next 60 days I would LOCK.

Posted by Scott Shinn on September 25th, 2009 11:35 AMPost a Comment (0)

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Today's Advisory - 9-24-2009
September 24th, 2009 11:42 AM
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THURSDAY MORNING UPDATE:

I advise locking today and here's why:

There have been three big market movers over the past two days:

1. Yesterday's 5 Year Note bond auction met with weak participation and higher yields.  Mortgage bonds responded very negatively and I posted on Twitter at about 1:15, mortgage bonds dropped to -40 and fell well below the 25 day moving average.

2. The FOMC meeting adjourned yesterday at 2:15 PM and the market mover for bonds was the statement from the Fed that they were going to fully fund the mortgage backed securities bond purchasing program to $1.25T and continue the purchasing into next year.  Mortgage bonds liked the news, rallied and closed +9.

3. This morning the housing numbers came out and reflected the first decline in 5 months, a slide of 2.7%.  This gave stocks a moment to reflect and the DOW is currently down 65.

But here's the very important point:

Bonds have had two bits of good news which have pushed rates down, but stocks have been on a tear and today's drop will likely be nothing more than a speed bump.  The moon and starts have aligned for the mortgage bond and currently the 30 year fixed rate is the best its been in over five months.  The 15 year is best since Freddie Mac started tracking it in the early 90's.  And the 5/1 ARM rates are unbelievable.

So if you or anyone you know is considering refinancing, now is the time.

Here are a couple things to consider:

1. Rates are artificially low because the Fed is buying mortgage bonds and that will end next year.

2. Fannie Mae has to compete with the Fed to sell mortgage bonds.  The Fed is selling multiple billions of dollars of bonds to finance the debt and to attract investment capital those yields are going up. To attract investment capital in mortgage bonds, those yields will have to go up too, thereby pushing mortgage rates up.

3. Stocks and bond compete for investment capital so as stocks recover money "parked" in bonds will move to stocks. In order for Fannie Mae to attract investors to get the capital they need to fund mortgages, yields on bonds will go up, thus rates will go up.

Could rates go down more? Yes, anything can happen. But the Fannie Mae Bond is once again above the 200 day moving average. The longest that the bond has stayed above the 200 day moving average since Jul 15th was five days and the last time it broke through it fell the very next day.  The 200 day moving average is starting to level out as well which is also an indicator that rates are flattening and a fluke like today should indicate LOCK.

If I were closing in the nexy 60 days, I would LOCK.

Posted by Scott Shinn on September 24th, 2009 11:42 AMPost a Comment (0)

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Today's Advisory - 9-22-2009
September 22nd, 2009 2:57 PM
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Tuesday's bond market has opened up slightly despite no relevant economic news on tap today. The stock markets showing minor gains with the Dow up 27 points and the Nasdaq up 6 points. The bond market is currently up 4/32, but we will again likely see little change in this morning's mortgage rates as traders and lenders wait for tomorrow's events to take place before making any sizable changes.

There are no significant events or relevant economic reports scheduled for today. Investors seem to be preparing for tomorrow's events and will likely keep bond prices near current levels until then. This means I am not expecting to see any noticeable changes to mortgage rates this afternoon.

The first of this week's two important Treasury sales will take place tomorrow and the Fed's two-day FOMC meeting will adjourn tomorrow afternoon. The Treasury will sell 5-year Notes tomorrow and 7-year Notes Thursday. If investor demand in these sales is strong, particularly from international buyers, the broader bond market should move higher pushing mortgage rates lower. But a lackluster interest from investors could lead to bond selling and higher mortgage pricing. The results of each sale will be announced at 1:00 PM ET each day, so any reaction to the results will come during afternoon trading tomorrow and Thursday.

The FOMC meeting began today and will adjourn at 2:15 PM tomorrow afternoon. There is little possibility of seeing any type of change to key short-term interest rates. However, the post-meeting statement could very well lead to volatility during afternoon trading as investors dissect it in an effort to find when the Fed's next move may come. The wild card is how the markets react to the statement because the lack of a change to monetary policy will not affect the markets. If we see significant weakness in stocks, the bond market may benefit as a safe-haven from the volatility. This could lead to lower mortgage rates during afternoon hours and Thursday morning.

We will finally get to see some economic data later this week. Thursday brings us the release of one relevant monthly report and Friday as three scheduled. None of the reports are considered to be extremely important to the markets, but we may see some movement in rates as a result of it, particularly Friday.

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... 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.
Posted by Scott Shinn on September 22nd, 2009 2:57 PMPost a Comment (0)

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Today's Advisory - 9-21-2009
September 21st, 2009 12:46 PM
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Monday's bond market has opened in positive territory after this morning's sole economic report gave us a slightly lower than expected reading. The stock markets are mixed with the Dow down 30 points and the Nasdaq up 6 points. The bond market is currently up 12/32, but we will likely see little change in this morning's mortgage rates.

The Conference Board said late this morning that its Leading Economic Indicators (LEI) for August rose 0.6%, meaning that it is predicting moderate to rapid growth in economic activity over the next few months, but at a slightly slower pace than analysts had thought. This is basically good news for bonds, but an upward revision to July's reading offset this news. Besides, this data is considered to be only moderately important and a wide variance would have been needed to really influence trading and mortgage rates.

The rest of the week brings us the release of four more relevant economic reports in addition to another FOMC meeting and two important Treasury auctions. None of the factual reports are considered to be highly important. In fact, most of the economic news is considered to be only moderately important. This should help limit the possibility of significant changes to mortgage rates most days this week.

There is relevant economic data scheduled for release tomorrow. The first of this week's two important Treasury sales will take place Wednesday and the Fed's two-day FOMC meeting will adjourn Wednesday afternoon. The Treasury will sell 5-year Notes Wednesday and 7-year Notes Thursday. If investor demand in these sales is strong, particularly from international buyers, the broader bond market should move higher pushing mortgage rates lower. But a lackluster interest from investors could lead to bond selling and higher mortgage pricing. The results of each sale will be announced at 1:00 PM ET each day, so any reaction to the results will come during afternoon trading Wednesday and Thursday.

The FOMC meeting will begin tomorrow and adjourn at 2:15 PM Wednesday. There is little possibility of seeing any type of change to key short-term interest rates. However, the post-meeting statement could very well lead to volatility during afternoon trading as investors dissect it in an effort to find when the Fed's next move may come. The wild card is how the markets react to the statement because the lack of a change to monetary policy will not affect the markets. If we see significant weakness in stocks, the bond market may benefit as a safe-haven from the volatility. This could lead to lower mortgage rates Wednesday afternoon and Thursday morning.

Overall, the single most important report of the week is Friday's Durable Goods Orders, but the most important day will probably be Wednesday due to the FOMC adjournment and the 5-year Treasury Note auction. Thursday's 7-year Note sale is actually a little more important for mortgage rates than Wednesday's auction but the first of the two will give us an idea of what to expect from Thursday's sale. I don't believe any of this week's data has the potential to move the markets or mortgage rates heavily. But, we may some change in rates day-to-day, with the most likely coming mid-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... 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.
Posted by Scott Shinn on September 21st, 2009 12:46 PMPost a Comment (0)

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Today's Advisory - 9-17-2009
September 17th, 2009 2:05 PM
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Thursday's bond market has opened in positive territory, following suit with stocks. The stock markets are continuing yesterday's positive tone, but to a much lesser scale. The Dow is currently up 23 points while the Nasdaq has gained 4 points. The bond market is currently up 8/32, which will likely improve this morning's mortgage rates by approximately .250 of a discount point.

Neither of today's economic releases are considered to be of high importance to the markets and have not had much influence on this morning's mortgage rates. The Labor Department reported that 545,000 new claims for unemployment benefits were filed last week. This was lower than expected and can be considered negative news for bonds. However, the short period that this report tracks usually means it does not heavily influence trading or mortgage pricing.

August's Housing Starts report was also posted this morning, showing an increase in starts of new homes from July to August. This data helps us measure housing sector strength, but is also not one of the more important reports we see each month. Its results also have had little impact on this morning's mortgage rates.

There is no relevant data scheduled for release tomorrow, so look for the stock markets to influence bond trading. I would not be surprised to see bonds move in the same direction as stocks. Either way, we probably will have a relatively calm day in mortgage rates tomorrow unless something totally unexpected happens.

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... 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.
Posted by Scott Shinn on September 17th, 2009 2:05 PMPost a Comment (0)

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Today's Advisory - 9-16-2009
September 16th, 2009 1:43 PM
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Wednesday's bond market opened in positive territory following the release of this morning's key inflation data that showed no significant surprises, but has since given back those gains. The stock markets are in positive ground with the Dow up 40 points and the Nasdaq up 11 points. The bond market is currently down 2/32, which will likely push this morning's mortgage rates higher by approximately .125 of a discount point.

There were two reports posted this morning. The first was August's Consumer Price Index (CPI) that revealed a 0.4% increase in the overall reading and a 0.1% rise in the core data. The increase in the overall reading was slightly higher than forecasts, but the more important core data reading that excludes volatile food and energy prices matched expectations. This means that prices at the consumer level of the economy rose modestly last month. That is good news for bond prices and mortgage rates because rapid increases in inflation makes long-term securities such as mortgage-related bonds less attractive to investors. The end result is almost always higher mortgage rates for borrowers.

The second report of the day was August's Industrial Production data. It showed a 0.8% increase in production at U.S. factories, mines and utilities. This was slightly more than expected, meaning manufacturing activity was a little stronger than thought. However, the difference was not enough to cause much concern in the bond market.

Tomorrow's data is much less important to the markets than the reports released the past two days. The Labor Department will give us last week's unemployment filings. They are expected to announce that 555,000 new claims for unemployment benefits were filed last week. This would be a small increase from the previous week, but unless we see a wide variance between forecasts and the actual number, this data likely will have little impact on tomorrow's mortgage pricing.

August's Housing Starts report will also be posted early tomorrow morning. This report is also considered to be low-to-moderately important and will probably not have a significant impact on the bond market or mortgage rates. It gives us a measurement of housing sector strength and mortgage credit demand. It is expected to show little change in starts of new home construction between July and August.

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... 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.
Posted by Scott Shinn on September 16th, 2009 1:43 PMPost a Comment (0)

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Today's Advisory - 9-14-2009
September 14th, 2009 12:39 PM
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Monday's bond market has opened in negative territory despite a flat morning in stocks and no economic data on today's calendar. The stock markets are calm with the Dow down 8 points and the Nasdaq nearly unchanged from Friday's close. The bond market is currently down 8/32, which will likely push this morning's mortgage rates higher by approximately .125 of a discount point.

This week brings us the release of five relevant economic reports that may influence mortgage rates, but none of them are scheduled for release today. A couple of the reports are considered to be highly important to the financial and mortgage markets, meaning that we may see significant changes to rates this week. There is a very good chance of seeing noticeable changes in rates at least one day, if not several days this week.

There are two highly important reports being released early tomorrow morning. The first is the release of August's Retail Sales report. It will give us a measurement of consumer spending, which is very important to the markets because consumer spending makes up two-thirds of the U.S. economy. Current forecasts are calling for a 1.9% increase in sales. The sizable jump is expected to come from auto sales that were fueled by the Cash For Clunkers program. Analysts are calling for a 0.4% rise in sales if auto sales are excluded. A larger than expected increase would be considered bad news for bonds and likely lead to an increase in mortgage pricing tomorrow.

The second important piece of data is the release of August's Producer Price Index (PPI), also being posted early tomorrow morning. This report will give us a very important measurement of inflationary pressures at the producer level of the economy. There are two readings that analysts follow in this release. They are the overall index and the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices. Analysts are currently predicting a 08% increase in the overall index, and a rise of 0.1% in the core data. Stronger than expected readings could fuel inflation concerns in the bond market and lead to an increase in mortgage rates tomorrow morning. Both of the day's reports are considered to be extremely important to the markets and mortgage rates.

Overall, I think we need to label tomorrow as the most important day of the week with the Retail Sales and PPI reports both being posted that day. However, Wednesday's CPI release is also extremely important to the markets, so Wednesday cannot be ignored either. We could see a significant change to rates this week if the major reports vary greatly from forecasts.

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.
Posted by Scott Shinn on September 14th, 2009 12:39 PMPost a Comment (0)

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Today's Advisory - 9-11-2009
September 11th, 2009 4:35 PM
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Friday's bond market has opened in positive territory despite stronger than expected economic news. The stock markets are showing minor losses with the Dow down 10 points and the Nasdaq down 1 point. The bond market is currently up 17/32, which should improve this morning's mortgage rates by approximately .250 of a discount point.

The University of Michigan posted their Index of Consumer Sentiment late this morning, announcing a reading of 70.2. This was a sizable increase from August's final reading and higher than what analysts had expected. This means that consumers are more optimistic about their own financial situations than many had thought. That can be considered bad news for bonds and mortgage rates because it hints that consumers are more apt to make large purchases in the near future. However, it appears the data is of no concern to traders this morning.

This morning's bond gains can partly be attributed to a good auction yesterday of 30-year Bonds. The results of the sale indicate that investors still have an appetite for U.S. securities. This has helped boost long-term securities such as mortgage-related bonds.

Next week brings us the release of several important reports including two key inflation readings and an extremely important measurement of consumer spending. None of the relevant reports are scheduled for release Monday, so I am expecting stock prices to heavily influence bond trading and mortgage rates until we get to the week's data. Look for more details on next week's events in Sunday's weekly preview.

If I were considering financing/refinancing a home, I would.... Float 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.
Posted by Scott Shinn on September 11th, 2009 4:35 PMPost a Comment (0)

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Today's Advisory - 9-9-2009
September 9th, 2009 4:25 PM
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Wednesday's bond market has opened in negative territory following early stock gains. The stock markets are extending yesterday's gains with the Dow up 60 points and the Nasdaq up 24 points. The bond market is currently down 8/32, but we will likely see little change in this morning's mortgage rates.

There is no relevant economic news scheduled for release today. The first release of the week comes tomorrow afternoon. The Federal Reserve will release its Beige Book report at 2:00 PM ET tomorrow. This report details current economic conditions in the U.S. by region. It is believed to be a key source of data when the Fed meets for their FOMC meetings and is usually released approximately two weeks prior to each meeting. If it reveals any significant surprises, we may see movement in the markets and mortgage pricing as analysts adjust their theories on the Fed's next move. Most likely though, it will be a non-event and will not lead to a noticeable change in mortgage rates.

Also tomorrow is the 10-year Treasury Note auction, which will be followed by the 30-year Bond auction Thursday. It is fairly common to see some weakness in bonds before these sales as investors prepare for them. But, if the sales are met with a decent demand from investors, those losses are normally recovered after the results are announced. The results will be posted at 1:00 pm ET each day. If demand was strong, particularly from international investors, we should see mortgage rates improve during afternoon trading tomorrow and Thursday.

I am expecting the stock markets to influence bond trading and mortgage rates tomorrow morning. We may see weakness in bonds prior to the Treasury auction that may also put some pressure on mortgage rates. But we will likely see little change in rates until tomorrow afternoon.

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.
Posted by Scott Shinn on September 9th, 2009 4:25 PMPost a Comment (0)

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Today's Advisory - 9-8-09
September 8th, 2009 4:02 PM
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Tuesday's bond market has opened flat after the holiday weekend with no relevant economic data scheduled for release today and only minor gains in the stock markets. The major stock indexes have opened the week relatively calm with the Dow up 32 points and the Nasdaq up 7 points. The bond market is nearly unchanged from Friday's close, but we will still likely see an increase of approximately .125 of a discount point over Friday's morning rates.

This week brings us the release of only three pieces of economic data, but none of them are considered to be highly important. In addition to the economic releases, we also have two Treasury auctions that may play a role in this week's mortgage pricing.

The first release of the week comes Wednesday afternoon. The Federal Reserve will release its Beige Book report at 2:00 PM ET Wednesday. This report details current economic conditions in the U.S. by region. It is believed to be a key source of data when the Fed meets for their FOMC meetings and is usually released approximately two weeks prior to each meeting. If it reveals any significant surprises, we may see movement in the markets and mortgage pricing as analysts adjust their theories on the Fed's next move. Most likely though, it will be a non-event and will not lead to a noticeable change in mortgage rates.

Also Wednesday is the 10-year Treasury Note auction, which will be followed by the 30-year Bond auction Thursday. It is fairly common to see some weakness in bonds before these sales as investors prepare for them. But, if the sales are met with a decent demand from investors, those losses are normally recovered after the results are announced. The results will be posted at 1:00 pm ET each day. If demand was strong, particularly from international investors, we should see mortgage rates improve during afternoon trading Wednesday and Thursday.

Overall, this week looks like it will be much less active for mortgage rates than last week was. We only have four days of trading to be concerned with. There is no particular data that is important enough to label its day of release as the most important of the week. This may allow the stock markets to heavily influence bond trading and therefore, impact mortgage rates this week. As long as the stock markets do not stage a sizable rally or sell-off this week, I believe we will only see minor changes to mortgage rates the next few days.

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... 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.
Posted by Scott Shinn on September 8th, 2009 4:02 PMPost a Comment (0)

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Today's Advisory - 9/3/2009
September 3rd, 2009 1:02 PM
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Thursday's bond market has opened in negative territory after the stock markets opened with minor gains and there was no important economic data on the calendar to influence trading. The Dow is currently up 25 points while the Nasdaq has gained 5 points. The bond market is currently down 4/32, which will likely push this morning's mortgage rates higher by approximately .125 of a discount point.

The only semi-relevant economic data posted today was last week's unemployment figures from the Labor Department and the ISM services index. Many traders are waiting for tomorrow's major news before making adjustments to their portfolios. The Labor Department reported this morning that 570,000 new claims for unemployment benefits were filed last week and the ISM index revealed a reading of 48.4. Both of these were very close to expectations but neither are considered to be of much importance to the markets. Therefore, the bond market has been mostly influenced by stock trading and preparation for tomorrow's news.

Yesterday's afternoon release of the FOMC minutes didn't have much of an impact on trading or mortgage rates. They revealed that the Fed is still optimistic about an economic recovery, but at a slow pace. They are still concerned about the vulnerability of the recovery and particularly the labor market and they also did not reference a significant concern about inflation- all good news for bonds. However, none of it came as much of a surprise to traders.

The big news of the week comes tomorrow morning. The Labor Department will post the unemployment rate, number of new jobs added or lost and average hourly earnings for August early Friday. The ideal scenario for the bond market and mortgage rates is rising unemployment, a larger than expected drop in payrolls and earnings to remain unchanged. Analysts are expecting to see that the unemployment rate moved from 9.4% to 9.5% and that 225,000 jobs were lost during the month. Weaker then expected readings would be very good news for bonds and likely lead to lower mortgage rates tomorrow. But, if we get stronger than expected numbers, mortgage rates will probably spike higher tomorrow.

I suspect that we will need to see weaker than expected readings for bonds to rally tomorrow. With the bond market at the higher end of its recent trading range, just matching forecasts may be a relief for stocks that could lead to selling in bonds and a rally in stocks. Accordingly proceed cautiously if still floating any interest rate and closing in the immediate future.

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... 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.
Posted by Scott Shinn on September 3rd, 2009 1:02 PMPost a Comment (0)

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Today's Advisory - 9/1/2009
September 1st, 2009 3:03 PM
Follow Me and when mortgage rates are headed up or down, I'll send you a tweet so you can lock or float ahead of the change.


Tuesday's bond market is in negative territory after this morning's primary economic release showed a much stronger than expected reading. The stock markets are showing losses with the Dow down 88 points and the Nasdaq down 12 points. The bond market is currently down 5/32, but I don't think we will see much of a change in this morning's mortgage rates due to strength late yesterday.

Today's big news came from the Institute for Supply Management (ISM), who posted their manufacturing index for August late this morning. They reported a reading of 52.9 that was stronger than analysts had expected, indicating manufacturer sentiment is growing. This was the first time this index was above 50 since January 2008. That is considered bad news for bonds and mortgage rates because it points towards a strengthening economy. However, a note in the report says that manufacturers are not planning on hiring new workers anytime soon. This helps support the theory that the job market will remain weak for some time, likely preventing a rapid economic recovery. The result was a minimal impact on this morning's bond trading and mortgage rates.

Tomorrow brings us three events for the markets to digest. The first is the revision to the 2nd Quarter Productivity numbers, which measures employee productivity in the workplace. Strong levels of productivity allow the economy to expand without inflation concerns. It is expected to show a downward change from the previous estimate of a 6.4% annual pace. Forecasts are currently calling for a reading of 6.1%. A larger than expected reading would be considered good news for bonds and mortgage rates.

The second relevant economic report is July's Factory Orders data. This report measures manufacturing sector strength and is similar to last week's Durable Goods Orders, but includes orders for both durable and non-durable goods. This data is expected to show a 1.5% increase in new orders. A smaller than expected rise should lead to lower mortgage rates Wednesday, as long as the productivity number doesn't hurt bond prices.

The third and final event tomorrow is the release of the minutes from the last FOMC meeting. There is a pretty good possibility of the markets reacting to them following their 2:00 PM ET release, especially if they show some divisiveness by its members. It will be interesting to see some of the Fed member's views on the economy and inflation and if they will hint what the Fed's next move may be. But this is one of those events that can cause significant movement in rates after its release or be a non-factor. It generally causes a little movement in bond prices but not enough to significantly affect mortgage pricing.

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.
Posted by Scott Shinn on September 1st, 2009 3:03 PMPost a Comment (0)

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