Tuesday, October 12, 2010

Market UpDate

Tuesday's bond market has opened in positive territory following early weakness in stocks. The stock markets are starting this holiday-shortened week in negative ground with the Dow down 50 points and the Nasdaq down 8 points. The bond market is currently up 6/32, which should improve this morning's mortgage rates by approximately .125 of a discount point from Friday's morning pricing.
There was no relevant economic data posted this morning, but we do have something of interest being released this afternoon. The Fed will release the minutes from their last FOMC meeting at 2:00 PM ET today. These have the potential to 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 Fed members were concerned about inflationary pressures, we may see the bond market move lower and mortgage rates higher tomorrow afternoon. However, if they repeat recent comments and stateme nts that inflation is not of much concern and that there is still considerable concern about the economy, we should see little reaction in mortgage rates or a small improvement. Also worth watching is any discussion about the Fed getting more involved with purchasing government or mortgage debt. Any indication of them making more purchases should be taken as very good news for mortgage rates and will likely lead to lower rates this afternoon.
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