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Friday’s bond market has opened in negative territory with stocks showing early gains. The Dow is currently up 41 points while the Nasdaq has gained 22 points. The bond market is currently down 8/32, which will likely push this morning’s mortgage rates higher by approximately .125 – .250 of a discount point over yesterday’s early pricing.
What was supposed to be a key day for the financial and mortgage markets is actually a dud because the government shutdown has prevented the release of September’s Employment report. That left nothing to drive bond trading or influence mortgage rates, leaving a direct pattern between stock strength and bond weakness. If the major stock indexes remain near current levels the rest of the day, I expect mortgage rates to follow suit.
I would not be surprised to see some progress out of Washington this weekend, but not a complete resolution. As we get closer and closer to the date of October 17 when the government will supposedly run out of money to pay bills, one side of the isle is likely to blink. I don’t believe that it really matters which one does in terms of an impact on mortgage rates. However, just the fact that a resolution becomes a possibility should cause movement in the markets and mortgage rates. Unfortunately, I don’t think that will necessarily be good news for mortgage shoppers, at least not in the immediate reaction. Therefore, please proceed cautiously if still floating an interest rate and are scheduled to close in the next week or so.
Next week has some important economic data scheduled for release (Producer Price index and Retail Sales data) along with the FOMC minutes and two Treasury auctions of long-term securities that tend to affect mortgage rates. Obviously, most of that is on standby until Congress decides to play nice with each other and the U.S. government reopens for business. Let’s see what happens over the weekend and if any progress actually is made.