Wednesday, October 28th
Wednesday’s bond market has opened in negative territory as traders await this afternoon’s Fed news. Stocks are mixed with the Dow up 140 points and the Nasdaq down 9 points. The bond market is currently down 4/32 (5.01%), which should push this morning’s mortgage rates slightly higher than Tuesday’s morning pricing.
4/32
Bonds
30 yr - 5.01%
140
Dow
52,518
9
NASDAQ
26,468
Trailing 90 Days - National Average
Low
Neutral
Yesterday’s 5-year Treasury Note auction was uneventful for the most part. The benchmarks we use to gauge investor demand for the securities pointed to an above average interest, particularly compared to other recent sales. Unfortunately, these are shorter-term securities, so it was not a surprise that we didn’t see mortgage rates react to the 1:00 PM ET results announcement. We have a similar auction set for tomorrow when 7-year Notes are being sold. Yesterday’s results allow us to be optimistic that tomorrow’s auction will also go smoothly, but it will also have a minimal impact on rates if any at all.
High
Unknown
Today’s only relevant events come this afternoon when this week’s FOMC meeting adjourns at 2:00 PM ET. The consensus amongst analysts is that Chairman Warsh and friends will leave key short-term interest rates unchanged at this meeting to allow more time for their previous quarter-point hike to have an impact on inflation. The Fed also tends to avoid making big monetary policy moves right before an election unless there is a strong need. While the majority of the FOMC is likely to vote for no change in key rates, it will be interesting to see how the vote count falls. A close split would support the theory that a rate hike is coming at December’s meeting. However, a unanimous vote would leave analysts guessing at what comes next. Their written post-meeting statement will also be released at 2:00 PM ET and the press conference with Chairman Warsh will start at 2:30 PM ET. This meeting does not include revised economic projections or their dot plot of key rate predictions. It is quite possible that we see a light reaction to this afternoon’s events, preventing an intraday revision to rates.
Medium
Unknown
Tomorrow has three economic reports scheduled for release at 8:30 AM ET, two of which are considered to be major reports. In addition to the less relevant weekly unemployment update, we will also get the initial Gross Domestic Product (GDP) reading for the 3rd quarter and September’s Personal Income and Outlays report that includes the Fed’s preferred inflation readings (PCE indexes). Look for details on those reports in this afternoon’s update that will be posted shortly after the markets have an opportunity to react to the FOMC events.
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... Float 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.