Aaron Abed

Tuesday's bond market has opened in positive territory again, despite early stock gains. The stock markets are rebounding from yesterday's 223 point loss in the Dow with fairly strong gains during morning trading. The Dow is currently up 181 points while the Nasdaq has gained 11 points. The bond market is currently up 9/32, which will likely improve this morning's mortgage rates by approximately .125 of a discount point.

The Labor Department gave us the first of the week's two key inflation readings. They reported that the PPI fell a whopping 2.8% that was a much larger drop than analysts had forecasted. However, the more important core data reading that excludes more volatile food and energy prices rose 0.4% when analysts were expecting to see a 0.1% rise. This means that prices for non food and energy costs rose more than expected, which is considered bad news for bonds and mortgage rates.

Today's markets are being boosted by favorable comme nts by Treasury Secretary Paulson that the Fed bailout program was making progress. Many lawmakers had questioned the usage of the money for the program but market participants liked what they heard, helping to fuel this morning's buying in stocks and bonds.

Tomorrow's only data is October's Housing Starts. This data gives us an indication of housing sector strength, but usually does not have a noticeably impact on mortgage rates. I don't expect this month's version to be any different unless it varies greatly from analysts forecast. It is expected to show a decline in starts of new homes.

Tomorrow afternoon brings us the release of the minutes to the last FOMC meeting. These may be a major mover of the markets or could be a non-factor, depending on what they say. The key will be concerns over inflation and the Fed's next move. If the Fed members were concerned about inflationary pressures, we may see the bond market move lower and mortgage rates highe r tomorrow afternoon. However, if they indicate a likelihood of another rate cut in the coming months, we should see the bond market rise and mortgage rates drop during afternoon trading.

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.

Monday's bond market has opened in positive territory following another round of stock weakness that has bonds looking more attractive to investors. The stock markets are continuing Friday's selling with the Dow currently down 162 points and the Nasdaq down 30 points. The bond market is currently up 11/32, which should improve this morning's mortgage rates by approximately .125 - .250 of a discount point.

Today's Industrial Production report revealed a much larger than expected increase in manufacturer output. The 1.3% increase greatly exceeded analysts' forecasts of a 0.1% decline in output, meaning that U.S. factories, mines and utilities were busier than many had thought. This is considered to be negative news for bonds and mortgage rates.

The rest of the week brings us the release of four more monthly reports for the markets to digest along with the minutes from the last FOMC meeting. The first of the week's two key inflation readings will be posted early tomorrow morning when October's Producer Price Index (PPI) is released. The PPI measures inflationary pressures at the producer level of the economy. There are two portions of the index that are used- the overall reading and the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices.

If the core data reveals stronger than expected readings, indicating that inflationary pressures are rising, the bond market will probably react negatively and should drive mortgage rates higher. If we see in-line or weaker than expected numbers, mortgage rates should fall. Current forecasts are calling for a decline of 1.8% in the overall reading and a 0.1% increase in the core reading.

Overall, look for tomorrow or Wednesday to be the most important day of the week with the PPI and CPI reports scheduled for release those days. They are the two most important releases of the week and ca n individually lead to large swings in the markets and mortgage rates. The FOMC minutes may also heavily influence trading and deserve to be watched also. I think this will be a fairly active week for mortgage rates, so please maintain regular contact with your mortgage professional.

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.

Thursday's bond market has opened in negative territory, erasing part of yesterday's late rally that came as a result of strong stock losses. The stock markets have opened in negative ground, continuing yesterday's selling. The Dow is currently down 90 points while the Nasdaq has lost 27 points. The bond market is currently down 4/32, but we will still likely see a small improvement in this morning's mortgage rates of approximately .125 of a discount point due to strength in bonds late yesterday.

This morning's first piece of news was the release of September's Goods and Services Trade Balance report. It gave us the size of the U.S. Trade Deficit, showing a $56.5 billion deficit. That was a little smaller than forecasts of $57.0 billion, but this data is not considered to be of high importance to the markets and has had little impact on this morning's trading or mortgage pricing.

The other news released this morning was weekly unemployment figures from the Labor Department. They reported that new claims for benefits jumped to 516,000 last week, exceeding forecasts of 479,000. The previous week's figures were revised to 484,000, meaning analysts were expecting to see a small decline in claims when we actually saw a sizable jump. While this data is not considered to be of high importance because it tracks only a week's worth of filings, it can influence trading and rates when it varies from forecasts such as today's variance.

There are two reports scheduled for release tomorrow morning with one of them considered to be very important to the markets. October's Retail Sales report is the first and the highly important one because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely. If this report reveals weaker than expected sales, the bond market should thrive and mortgage rates will fall. Current forecasts are calling for a drop in sales of approximately 2.1%.

The second report comes late tomorrow morning when November's preliminary reading of the University of Michigan's Index of Consumer Sentiment will be released. This index measures consumer confidence, which gives us an indication of consumer willingness to spend. It is expected to show a reading of 57.0, down from October's final reading of 57.6.

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.

Wednesday's bond market has opened in positive territory as investors shift funds from stocks into bonds. This has pushed the stock indexes significantly lower again with the Dow down 312 points and the Nasdaq down 46 points. The bond market is currently up 14/32, which should improve this morning's mortgage rates by approximately .125 - .250 of a discount point over Monday's rates. The bond market was closed yesterday in observance of the Veteran's Day holiday.

There is no relevant data being released today, but we will get the results of today's 10-year Treasury Note auction at 1:00 PM ET. These results can influence bond trading enough to affect mortgage rates this afternoon. If the sale was met with a strong demand from investors, bonds will likely rally and mortgage rates should fall. However, a lackluster interest could lead to weakness in bonds and higher mortgage rates.

The first economic data of the week is September's Goods and Service s Trade Balance report Thursday morning. It helps us measure the size of the U.S. trade deficit, but usually is not a major influence on bond trading or mortgage pricing. It does affect the value of the U.S. dollar, which makes U.S. securities more attractive to international investors when the dollar is strong. This is because the securities' proceeds are worth more when sold and converted to the investor's domestic currency. However, its results will not likely directly lead to changes in mortgage rates.

Overall, look for a fairly quiet week in the mortgage market compared to previous weeks unless something totally unexpected transpires. The two Treasury auctions that are of the most interest are today's and Thursday's since they can impact mortgage rates the most. But there is only one important report being posted and that doesn't come until Friday morning.

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.

TUESDAY'S UPDATE:

The bond market is closed today in observance of the Veterans Day holiday and will reopen tomorrow morning. The stock markets are trading today but in negative territory. The Dow is currently down 240 points while the Nasdaq has lost 42 points. Some lenders may post rates today, but will likely use yesterday's afternoon rates.

This week brings us the release of only three relevant economic reports with only one of them being considered highly important. There is no relevant news scheduled for release tomorrow except for the results of the 10-year Treasury Note auction. Results will be posted at 1:00 PM ET and can influence bond trading enough to affect mortgage rates. If the sale was met with a strong demand from investors, bonds will likely rally and mortgage rates should fall. However, a lackluster interest could lead to weakness and higher mortgage rates.

The first economic data of the week is September's Goods and Services Trade Balance report Thursday morning. It helps us measure the size of the U.S. trade deficit, but usually is not a major influence on bond trading or mortgage pricing. It does affect the value of the U.S. dollar, which makes U.S. securities more attractive to international investors when the dollar is strong. This is because the securities' proceeds are worth more when sold and converted to the investor's domestic currency. However, its results will not likely directly lead to changes in mortgage rates.

Overall, look for a fairly quiet week in the mortgage market compared to previous weeks unless something totally unexpected transpires. The two Treasury auctions that are of the most interest are Wednesday's and Thursday's since they can impact mortgage rates the most. But there is only one important report being posted and that doesn't come until Friday morning.

If I were considering financing/refinancing a home, I would.... Lock if my cl osing 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.