Monday’s bond market has opened up sharply due to weekend events regarding Greece’s potential financial collapse. The stock markets are posting sizable losses due to the same news, pushing the Dow lower by 154 points and the Nasdaq down 50 points. The bond market is currently up 24/32 (2.38%), which should improve this morning’s mortgage rates by approximately .250 of a discount point from Friday’s morning pricing.
There is nothing in terms of relevant economic data being posted today. All of today’s movement in the financial markets can be attributed to news from Greece that makes it appear a default on their debt payment due tomorrow is highly likely. It is also widely expected that a default will lead to them being removed from the euro currency system and have an impact on the regional economies, possibly affecting global economic growth. That is why we are seeing stocks suffer this morning and bonds rally. Look for this situation to be in the forefront the next couple days, but be careful because any hint of a resolution can quickly erase this morning’s bond gains.
The remainder of this holiday-shortened week has five pieces of relevant economic data that may influence mortgage rates. Two of them are considered to be highly important to the markets. The Independence Day holiday will alter our trading hours at the end of the week and the traditional posting day for some data.
Tomorrow has one of this reports scheduled. June’s Consumer Confidence Index (CCI) will start the week’s economic calendar at 10:00 AM ET tomorrow. This data is relevant to the financial markets because it measures consumer willingness to spend. If consumers are more confident about their own financial and employment situations, they are more apt to make large purchases in the near future, fueling economic growth. If it shows a sizable increase in confidence from last month, we can expect to see a negative reaction in bonds and mortgage rates. Current forecasts are calling for a reading of 97.5, up from last month’s 95.4 reading. The lower the reading, the better the news it is for bonds and mortgage rates.
The U.S. financial and mortgage markets will be closed Friday in observance of the Independence Day holiday. The bond market will also close early Thursday afternoon ahead of the holiday and will reopen Monday morning for regular trading hours. We could see bond traders sell some holdings before the 2:00 PM ET close to protect themselves over the holiday, which raises the possibility of seeing an upward revision to mortgage rates Thursday afternoon. This is especially true if the Employment report shows significant surprises.
Overall, I am expecting to see another active week for the financial markets and mortgage rates. The most important day of the week is Thursday due to the Employment data and early closing, but today and tomorrow are going to be quite interesting as the Greece issue plays out. Because of the importance of some of this week’s data and the volatile Greece situation, I strongly recommend maintaining contact with your mortgage professional if still floating an interest rate and closing in the near future.