Trade Balance

Weekly Economic Releases for Apr. 5th

This holiday-shortened week brings us the release of little relevant economic data for the markets to digest. We will, however, see the minutes from the last FOMC meeting and have a couple of Treasury auctions to watch. There is only one monthly economic report on tap this week and is one of the least important reports posted each month.

There is nothing of relevance scheduled for tomorrow. There is no relevant news scheduled until Wednesday afternoon when the FOMC minutes will be released. Market participants will be looking at these minutes closely. They give us insight to the Fed’s current thought process and individual Fed member opinions. Any surprises in the 2:00 PM ET release could cause afternoon volatility in the markets Wednesday and possible changes in mortgage pricing.

The two Treasury auctions are scheduled for Tuesday and Thursday. There is a 10-year Treasury Inflation Protected Security (TIPS) sale Tuesday and a regular 10-year Not e sale Thursday. We could see some weakness in bonds ahead of the sales as investing firms sell current holdings to prepare for them. This weakness is usually only temporary if the sales are met with a decent demand. The results of the auctions will be posted at 1:00 PM ET each day. 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 Tuesday and/or Thursday afternoon.

The only piece of monthly data is February’s Goods and Service Trade Balance report Thursday 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.

Overall, I am proceeding into this week very cautiously. There are several variables that could make this week very quiet or quite rocky for mortg age shoppers. Wednesday’s FOMC minutes could very well be a major market mover or a complete non-factor. The same goes for Thursday’s auction (Tuesday’s sale will probably have less influence on the markets than Thursday’s). In addition, the bond market will close early Thursday and remain closed until Monday in observance of the Good Friday holiday. This could lead to some additional volatility as traders look to protect themselves over the long weekend.

In other words, we may have a very calm week ahead of us, or we may see rates move noticeably several days. With no important economic data to drive trading and mortgage rates, bonds may move with stocks. This means large stock gains could lead to bond selling and higher mortgage rates. But stock weakness could lead to mortgage pricing improving for the week. Regardless, a lack of economic data is not reason to let our guard down if still floating an interest rate. Watch the market closely and proceed cautiously if not locked yet.

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… 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.

Trade Balance

Weekly Economic Releases for Feb. 8th

There are only three pieces of economic data scheduled to be posted this week along with a couple of Treasury auctions and relevant speeches from highly important speakers. Only one of the three reports are considered to be of high importance while one is moderately important. The third is not considered to be of much importance unless it varies greatly from forecasts.

None of the economic reports will be posted tomorrow. However, tomorrow evening President Obama will address the nation on national television. He will likely speak about his economic recovery plan amongst other important topics. What he says may heavily influence trading the following morning. It is very difficult to predict whether the markets are likely to react favorably to his words or negatively. But I am expecting to see volatility Tuesday morning.

Fed Chairman Bernanke will be speaking before the House Financial Services Committee Tuesday at 1:00 PM ET. He is expected t o testify and update the panel on the Fed’s liquidity injections and future plans. His words could create movement in the markets and possibly mortgage pricing during afternoon trading.

There is no relevant data scheduled for release until Wednesday morning. This is when the week’s least important data, December’s Goods and Services Trade Balance, will be posted. This report measures the U.S. trade deficit and can affect the value of the U.S. dollar versus other currencies, but it usually does not cause enough movement in bond prices to affect mortgage rates.

The most important of the three reports this week is Thursday’s release of January’s Retail Sales data. This report is very important to the financial markets because it measures consumer spending. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched quite closely. If Thursday’s report reveals weaker than expected sales, the bond market should thrive and m ortgage rates will fall. However, a stronger reading than the expected unchanged level of sales could lead to higher mortgage rates. Current forecasts are calling for a decline in sales of 0.3%.

February’s preliminary reading to the University of Michigan Index of Consumer Sentiment will be released late Friday morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. If it shows an increase in consumer confidence, the stock markets may move higher and bond prices could fall. It is currently expected to rise slightly from January’s final reading of 61.2 to 61.5 for this month.

Overall, it is difficult to peg a particular day as the most important of the week. Tuesday will be quite interesting with the reaction to President Obama’s words from Monday evening and Fed Bernanke’s testimony on the Fed’s attempts to stabilize the financial system. The single most important piece of economic news comes Thursday, so that day needs to be given much weight also. Throw in the fact that there is an early close Friday due to the President’s Day holiday next Monday, and we have the makings of an interesting week ahead of us.

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.