Monday, December 22th
Monday’s bond market has opened in negative territory despite little in terms of newsworthy headlines. Stocks are showing early gains with the Dow up 106 points and the Nasdaq up 99 points. The bond market is currently down 7/32 (4.16%), but small gains late Friday should keep this morning’s mortgage rates close to Friday’s early pricing.
7/32
Bonds
30 yr - 4.16%
106
Dow
48,241
99
NASDAQ
23,407
Trailing 90 Days - National Average
Low
Negative
There are no relevant economic releases or other events scheduled today that are expected to influence mortgage rates. We aren’t seeing a clear reason for this morning’s early bond market losses. It could be a result of traders being anxious about the batch of data coming tomorrow. Or it may be bonds just simply further establishing their recent range. Either way, it causes us to start this holiday-shortened week with caution.
Medium
Unknown
This rest of the week has only three economic reports set for release that we will be watching, in addition to a couple of Treasury auctions and the weekly unemployment update. All of the more important data comes tomorrow, leaving just the weekly unemployment figures for Wednesday.
High
Unknown
The week's first piece of data will come at 8:30 AM ET tomorrow morning when the shutdown-delayed preliminary reading of the 3rd Quarter Gross Domestic Product (GDP) will be posted. The GDP is considered to be the benchmark gauge of economic growth because it is the total of all goods and services produced in the U.S. While the age of this data will likely soften its influence on the markets, it is still relevant and should draw a reaction if there is a surprise. Current forecasts show the economy expanded at a 3.2% annual pace during the July through September months. If we get a noticeably smaller rate of growth, the bond market should rally and mortgage rates will fall. However, a much stronger economy often leads to bond selling and an increase in mortgage pricing.
High
Unknown
October’s Durable Goods Orders report is tomorrow’s second release. The 8:30 AM ET release gives us a measurement of manufacturing strength by tracking orders for big-ticket products such as appliances, airplanes and electronics. This is another report that traditionally draws plenty of attention but wasn’t released as scheduled because of the government shutdown. Analysts are expecting to see a 0.4% increase in new orders, pointing to modest growth in manufacturing. It is worth noting that this data is known to be quite volatile from month to month, meaning a noticeable variance from forecasts may not have the same impact on the bond market and mortgage rates as it would in many other reports.
Medium
Unknown
Tomorrow’s final economic release will be the Fed’s Industrial Production report at 9:15 AM ET. This update will be a combination report that covers both October and November. It tracks output at U.S. factories, mines and utilities, giving us a sign of manufacturing strength, but isn’t considered to be one of the more important reports each month. We usually see a modest reaction to its results, even when it varies from forecasts. This version should be no different. Favorable news for mortgage rates would be a decline in production.
Medium
Unknown
There are also two relatively important Treasury auctions this week that may influence bond trading enough to affect mortgage rates slightly. First will be an auction of 5-year Treasury Notes tomorrow followed by 7-year Notes Wednesday. If these sales go poorly, meaning investor demand was soft, we could see broader selling in the bond market that leads to a modest upward revision in mortgage rates. On the other hand, strong investor demand usually leads to bond yields and mortgage pricing moving slightly lower. Results will be posted at 1:00 PM ET, making this an early afternoon event for rates tomorrow.
---
Unknown
Overall, tomorrow is clearly the most important day for mortgage rates this week. The calmest day will probably be Friday since there is no relevant data and many traders will be out of the office for the extended holiday weekend. We still could see a noticeable move in rates this week if tomorrow’s data shows some big surprises. Therefore, please keep an eye on the markets if still floating an interest rate and closing in the near 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... 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.