Wednesday's bond market has opened in negative territory after the stock markets are showing modest gains. After yesterday's huge rally in stocks led to bond selling, traders a little leery of stock gains today, fearing that the rally will lead to further bond selling. The Dow is currently up 5 points while the Nasdaq has gained 2 points. This is a far cry from the 391 point and 83 point gains we saw in stocks yesterday, but the lack of solid losses in stocks this morning has some bond traders on edge.

The bond market is currently down 8/32, which will likely push this morning's mortgage higher by approximately another .125 of a discount point over yesterday's rates. If the major stock indexes do move higher in trading later today, we could see more pressure in bonds and upward revisions to mortgage rates. However, if the indexes slide, bonds could benefit. This could lead to improvements to mortgage rates.

The only relevant economic data released this morning was February's Factory Orders. It showed a 1.3% drop in new orders that was much weaker than the forecasted 0.8% decline. This is good news for bonds because weaker than expected economic data usually eases inflation worries and concerns over economic growth.

Fed Chairman Bernanke is speaking to a congressional committee today about recent turmoil in the markets. As usual, traders will be watching his words closely for any indication of what the Fed may do next. He stated this morning that the economy could very well already be in a recession, which should be taken as good news for bonds. He is still testifying, so there is a possibility of his words creating additional volatility in the markets in the coming hours.

Tomorrow morning brings us the release of weekly unemployment figures from the Labor Department but they usually don't have much of an impact on the bond market or mortgage rates. Also worth watching though is the ISM Services Index. It is the sister report to the ISM Manufacturing Index that was released yesterday. It is one of those reports that can take center stage and influence trading and rates or could be a complete non-factor. It all depends on its results. Therefore, we should be fairly cautious going into tomorrow, especially since we will see the almighty Employment report Friday morning.

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