Thursday, December 17, 2009

Market Commentary for Dec. 17th 2009

Thursday’s bond market has opened in positive territory following a weak open in stocks. The stock markets are reacting to overseas losses and concerns about the economy after yesterday’s FOMC comments. The Dow is currently down 98 points while the Nasdaq has lost 23 points. The bond market is currently up 17/32, which will likely improve this morning’s mortgage rates by approximately .250 of a discount compared to yesterday’s morning rates.

The Labor Department gave us last week’s unemployment figures early this morning. They announced that 480,000 new claims for unemployment benefits were filed last week. This was good news for bonds because it was a higher number of claims than was expected. However, this data usually has little impact on mortgage rates because it tracks only a week’s worth of new claims.

Late this morning, the Conference Board posted their Leading Economic Indicators (LEI) for November. It showed a 0.9% increase, meaning that they think economic activity will be stronger over the next several months than many analysts had thought. This can be considered negative news for bonds, but since this is only a moderately important report, its impact on bond trading and mortgage rates has been minimal.

There is no relevant economic data scheduled for release tomorrow. We likely will see plenty of movement in the stock markets tomorrow as a result of option expirations. Therefore, we cannot rely on stocks to give direction to bonds since the movement in the major stock indexes will be due more to the expirations than direct concerns or optimism about the economy. In other words, it will likely be a directionless day for bonds tomorrow unless something unexpected occurs.

If I were considering financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float 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...

No comments:

Post a Comment