Wednesday's bond market has opened in positive territory following early stock losses. The stock markets are showing weakness with the Dow down 70 points and the Nasdaq down 24 points. The bond market is currently up 15/32, but we likely will not see much of an improvement in this morning's mortgage rates as a result of weakness in bonds late yesterday.

Yesterday's Fed minutes release actually gave us favorable news. The Fed was clearly concerned about economic growth and likelihood of a recession during the last FOMC meeting. They indicated that the economic slowdown could continue well into next year, which surprised many analysts. This is generally good news for bonds because weak economic conditions make stock less appealing to investors. As a result, funds are shifted into bonds, leading to lower mortgage rates.

There is no relevant economic news scheduled for release today. The first piece of monthly data is February's Goods and Service Trade Balance report tomorrow morning. This data gives us the size of the U.S. trade deficit, but unless it varies greatly from forecasts, it likely will not cause much movement in mortgage rates.

Also tomorrow are weekly unemployment claims from the Labor Department. After last week's spike in claims, this report may draw a little more attention than it usually does. It is expected to show that claims fell back to 380,000 last week. If it tomorrow's release reveals a figure near or above 400,000 again, we should see the bond market react favorable and mortgage rates move slightly lower.

There is a 10 year Treasury Inflation Protected Security (TIPS) sale tomorrow also. We could see some weakness in bonds ahead of the sale as investing firms sell current holdings to prepare for it. This weakness is usually only temporary if the sales are met with a decent demand. The results of the sale will be posted at 1:00 PM ET. If the demand from investors was strong, the bond market could rally during afternoon trading, leading to lower mortgage rates. If the sales were met with a poor demand, the afternoon weakness may cause upward revisions to mortgage pricing tomorrow afternoon.

If I were considering financing/refinancing a home, I would.... Lock 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... 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.

©Mortgage Commentary 2008