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Tuesday's Bond Market Opened In Negative Territory

November 12th, 2013 9:35 AM by Jackie A. Graves

Rate Lock Advisory - Tuesday Nov. 12th

Tuesday’s bond market has opened slight in negative territory following the long weekend. The stock markets are flat also with the Dow down 8 points and the Nasdaq down 1 point. The bond market is currently down 3/32, which should keep this morning’s mortgage rates very close to Friday’s morning pricing. The bond market was closed yesterday in observance of the Veteran’s Day holiday.

There is nothing of importance scheduled for release today that is likely to affect bond trading or mortgage rates. Look for the stock markets to help influence bond and mortgage rates direction this afternoon and tomorrow morning. If we see intra-day revisions to mortgage rates, it will likely be a result of a noticeable move in the major stock indexes. If they remain near current levels, mortgage rates will probably follow suit until tomorrow.

Tomorrow doesn’t have any economic data scheduled for release that is worth watching either. However, we do have the first of two Treasury auctions that have a decent chance of affecting mortgage rates. 10-year Treasury Notes will be sold tomorrow while 30-year Bonds will be auctioned Thursday. The 10-year sale is the more important of the two for mortgage rates as it will give us a better indication of demand for mortgage-related securities. If the sales are met with a strong demand from investors, we should see the bond market move higher during afternoon trading tomorrow and/or Thursday. But a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader bond selling. The selling in bonds would probably result in upward revisions to mortgage rates.

All of this week’s economic data is set for release Thursday and Friday, although none of it is considered to be highly important to the financial or mortgage markets. Thursday’s data will give us the size of the U.S. Trade Deficit and a measurement of worker productivity last quarter along with the traditional weekly unemployment update. Friday has some minor manufacturing sector data scheduled to be posted.

Overall, there isn’t a specific day that stands out as the most important day of the week. None of the data is likely to lead to a sizable change in mortgage rates, so if there are any significant moves in rates they will probably come from other sources such as a significant stock rally or sell-off. Tomorrow’s 10-year Note auction could be interesting and will have a direct impact on rates, so by default we will label it as the most important day. I never recommend ignoring the markets as momentum can pick up or change direction unexpectedly at any time. However, I just don’t see anything to be too concerned or optimistic about this week. Still, maintaining some type of contact with your mortgage professional is prudent if floating an interest rate.

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... 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 2013

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Posted in:General
Posted by Jackie A. Graves on November 12th, 2013 9:35 AM


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