Tuesday, February 17th
Tuesday’s bond market has opened relatively calm as traders await this week’s scheduled events. Stocks are starting the new week with losses of 245 points in the Dow and 247 points in the Nasdaq. The bond market is currently up 1/32 (4.04%), which should keep this morning’s mortgage rates close to Friday’s early pricing. The financial markets were closed yesterday for the President’s Day holiday.
1/32
Bonds
30 yr - 4.04%
245
Dow
49,255
247
NASDAQ
22,299
Trailing 90 Days - National Average
High
Unknown
There is nothing of importance scheduled for release today. We have two afternoon Fed-member speeches that are on the calendar, but are unlikely to draw a noticeable response in the markets. The remainder of the week has eight monthly or quarterly reports set for release, in addition to a Treasury auction and the minutes from last month’s FOMC meeting. Two of this week’s economic releases are considered to be highly influential.
Low
Unknown
Activities start tomorrow morning with three monthly reports and two afternoon events scheduled. We will first get November and December’s new home groundbreaking numbers in the 8:30 AM ET Housing Starts report. This data isn’t usually known to have a noticeable impact on mortgage rates since it covers such a small portion of the housing sector. The age of it now is only going to minimize its influence even more. There is a strong chance that tomorrow’s markets will have no reaction to the data.
Medium
Unknown
December’s Durable Goods Orders will also be posted early tomorrow morning. The report tracks new orders for big-ticket products at U.S. factories, such as airplanes, appliances and electronics, giving us an indication of manufacturing sector strength or weakness. November’s release showed a 5.3% rise in new orders, pointing to manufacturing strength. Tomorrow’s update is expected to reveal a 2.0% decline in new orders as the year came to an end. Manufacturing sector weakness is good news for bonds and mortgage rates. Accordingly, a larger than predicted decline in orders would be favorable news for mortgage pricing.
Medium
Unknown
Tomorrow’s third economic release will be January’s Industrial Production report at 9:15 AM ET. It gives us another snapshot of manufacturing sector strength by gauging output at U.S. factories, mines and utilities. Analysts are expecting to see a 0.3% increase in production levels from December to January. A smaller gain in output would be good news for bonds and mortgage pricing.
Medium
Unknown
This week’s sole relevant Treasury auction is happening tomorrow when 20-year Bonds are being sold. Results of the sale will be announced at 1:00 PM ET, making this an early afternoon event for rates. If the benchmarks show there was a strong demand from investors, we could see bond prices rise during afternoon hours, pushing yields and mortgage pricing slightly lower. On the other hand, a weak interest in the securities has the potential to cause an upward revision to mortgage pricing. Last week’s two auctions gave us mixed results with the 10-year Note drawing a below-average interest and the 30-year Bond auction going very well.
Medium
Unknown
The second afternoon event will be the 2:00 PM ET release of the minutes from last month's FOMC meeting. Traders will be looking for any indication of when the Fed may make another cut to key short-term rates. Recent data that has been posted after the meeting showed strength in the employment sector and weaker than expected inflation data. Both scenarios help boost the possibility of a rate cut coming sooner than later. Unfortunately, we will be looking at the minutes before that data was made available. If the minutes hint that a majority of Fed members may be ready to lower key rates soon (before that data was released), we should see a positive response in the markets tomorrow afternoon. This could also contribute to a downward revision in mortgage pricing before the end of the day.
High
Unknown
Overall, Friday is the most important day for mortgage rates due to the importance of the initial Gross Domestic Product (GDP) reading and the Fed’s preferred PCE inflation indexes. With so much scheduled this week, it should be a very active one for the financial and mortgage markets. Therefore, it would be prudent to keep an eye on them 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... 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.