Monday, November 10th
Monday’s bond market has opened in negative territory following weekend shutdown news. Stocks are reacting to the same headlines, pushing the Dow higher by 149 points and the Nasdaq up 460 points. The bond market is currently down 2/32 (4.10%), which should cause an increase in this morning’s mortgage rates of approximately .125 of a discount point.
2/32
Bonds
30 yr - 4.10%
149
Dow
47,136
460
NASDAQ
23,465
Trailing 90 Days - National Average
Medium
Negative
There is no relevant economic data being released today. We are seeing the markets react mostly to news that the Senate may now have the needed votes to pass legislation that will reopen the government. There are still some things that need to happen, but the biggest hurdle looks to have been cleared. This is being taken as bad news for bonds because the shutdown was thought to be having a negative impact on the broader economy. In other words, the shutdown ending will be a boost to the U.S. economy and bonds are less appealing to investors when the economy is stronger. Their attention tends to turn to stocks, which is partly why stocks are showing gains this morning.
Low
Neutral
The remainder of this holiday-shortened week brings us little in terms of data and other events that are expected to influence mortgage rates. Tomorrow’s Veteran’s Day holiday means the bond market will be closed, stocks will trade a fully day. Since the bond market is closed and there are major events scheduled, there will not be an update to this report tomorrow.
Medium
Unknown
If the shutdown does come to an end this week, we still won’t immediately get the important economic data that was scheduled for release, nor any of the previous delayed reports. Once the government reopens and staff return to work, it will take a little time to compile the data for the reports and then set a release schedule. That leaves us with a couple of Treasury auctions and an abundance of Fed-member speeches that are likely to drive bond trading and mortgage rates.
Medium
Negative
Also worth noting is the fact that the benchmark 10-year Treasury Note yield broke back above the important threshold of 4.0% last week and did so with some conviction. That is a concerning sign for the direction of mortgage rates. There doesn’t seem to be enough scheduled this week to bring it back below that level. Accordingly, we don’t have high expectations that rates will drop noticeably lower this week.
High
Unknown
Overall, Wednesday is the best candidate for most important day for rates even though we likely won’t see a big move until the 10-year Treasury Note auction results are posted at 1:00 PM ET. The calmest day may be Friday unless something unexpected happens. There are some weeks that we go into expecting to see a great deal of volatility in the financial and mortgage markets. This is not one of them. That said, it would still be prudent to keep an eye on the markets if still floating an interest rate and closing soon because they can get active with little or no notice.
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.