Friday, December 17, 2010

Market UpDate

Friday’s bond market has opened in positive territory again with a mixed morning in stocks and no surprises in today’s only economic news. The Dow is currently down 28 points while the Nasdaq has gained 6 points. The bond market is currently up 7/32, but we should see a sizable improvement in this morning’s mortgage pricing due partly to strength in bonds late yesterday. If comparing to yesterday’s morning pricing, we should see an improvement of approximately .625 of a discount point in rates.
November’s Leading Economic Indicators (LEI) was today’s only relevant economic data. The Conference Board announced an increase of 1.1% in November’s reading, meaning they are predicting fairly rapid economic growth over the next three to six months. This is basically bad news for the bond market and mortgage rates, but since it nearly matched forecasts it has had a minimal impact on today’s pricing.
Yesterday’s late strength that carried into this morning’s trading allows us to be optimistic that the worst is behind us in regards to the bond sell-off and resulting spike in mortgage rates. If looking at the markets using the same approach that has worked so well for us for many years, we could see further improvements to rates in the immediate future. However, that same approach didn’t do us much good the first part of the month as bond yields and mortgage rates shot upward. So, we remain cautiously optimistic. It would be a good idea to not let our guard down quite yet, but if the current situation as we see it remains intact, there is more likelihood of seeing rates improve from current levels than there is of them moving much higher. Let’s cross our fingers that we don’t get blindsided again.
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