Tuesday's bond market has opened down sharply following significant stock gains. The Dow and Nasdaq are both rallying with gains of 243 points and 46 points respectively. The bond market is currently down 34/32, which will likely push this morning's mortgage rates higher by approximately .375 - .500 of a discount point.

Helping to fuel this morning's stock rally and bond selling was a stronger than expected reading from the Institute for Supply Management (ISM). They reported that their manufacturing index rose slightly to 48.6 last month when it was expected to fall from February's level. This index gives us an important measurement of manufacturer sentiment by surveying trade executives, meaning that sentiment not only was stronger than expected but was higher than it was in February. That could mean that manufacturing activity may be rising and that would be bad news for the bond market and mortgage rates.

February's Factory Orders will be pos ted early tomorrow morning. This data is similar to last week's Durable Goods Orders report, except that this report includes orders for both durable and non-durable goods. Unless it varies greatly from forecasts of a 0.8% decline, I suspect that it will be a non-event in the mortgage market.

The other important report of the week will be posted Friday morning. The Labor Department will release March's Employment report, giving us the U.S. unemployment rate and the number of jobs added to the economy. This is an extremely important report to the financial and mortgage markets. It is expected to show an increase in the unemployment rate from February's 4.8% to 5.0% and that approximately 50,000 payrolls were lost during the month.

I expected to see the most movement in rates either today or Friday. Friday can be considered the most important day of the week with the employment numbers being released, but this morning's data did fuel a noticeable move in mortgage rates as predicted. If we see weaker than expected results in Friday's data, we can easily recover this morning's losses in rates. However, stronger than expected figures will most likely lead to another jump in mortgage pricing Friday.

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