Monday, October 25, 2010

Monday Market UpDate

Monday's bond market has opened in positive territory despite stronger than expected housing data and early stock strength. The stock markets are reacting favorably to the data, pushing the Dow up 70 points and the Nasdaq up 15 points. The bond market is currently up 10/32, which should improve this morning's mortgage rates by approximately .125 of a discount point

The National Association of Realtors said late this morning that sales of existing homes rose approximately 10% last month. This was much stronger than many had expected, indicating that the housing sector was not as bad as thought. That is basically bad news for the bond market but bond traders don't appear to be too concerned with it.

The rest of the week brings us the release of six more economic reports and two relevant Treasury auctions for the bond market to digest. October's Consumer Confidence Index (CCI) is tomorrow's only news. This Conference Board index will be released at 10:00 AM ET. It gives us a measurement of consumer willingness to spend and is expected to show a small increase in confidence from last month's 48.5 reading. That would mean that consumers felt a little better about their own financial situations than last month, indicating they are more likely to make large purchases in the near future. As long as the reading doesn't exceed the forecasted 49.0, we will likely see the bond market react favorably to this report. This data is watched closely because consumer spending makes up two-thirds of the U.S. economy.

Overall, we likely have an active few days ahead of us. I believe that the single most important day will probably end up being Friday with the extremely important GDP release in the morning and three reports on the day. It is difficult to label any day as the least important with all having something scheduled that has the potential to change rates. Accordingly, I strongly recommend maintaining contact with your mortgage professional this week, especially if still floating an interest rate.
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