Monday’s bond market has opened well in negative territory, erasing Friday’s gains. The stock markets are showing relatively minor losses during early trading with the Dow down 29 points and the Nasdaq down 18 points. The bond market is currently down 15/32 (2.18%), which should cause this morning’s mortgage rates to be approximately .125 of a discount point higher than Friday’s morning pricing.
The bond market is giving back Friday’s gains that came mostly during afternoon trading. Many lenders revised rates lower Friday afternoon as bonds improved. If your lender did make an intraday improvement Friday afternoon, you will likely see a larger increase in today’s rates. The net difference should be slightly higher rates than was posted Friday morning.
There is nothing of importance scheduled for today. Today’s selling appears to simple preparation for this week’s Fed meeting. The rest of the week has four monthly economic reports scheduled for release in addition to some key Fed events that should significantly affect the financial and mortgage markets.
November’s Consumer Price Index (CPI) will start the week’s activities at 8:30 AM ET tomorrow. It is similar to last Friday’s Producer Price Index, except it tracks inflationary pressures at the important consumer level of the economy. Current forecasts show no change in the overall reading and an increase of 0.2% in the core data that excludes more volatile food and energy prices. This data is one of the most watched inflation indexes, which is extremely important to long-term securities such as mortgage related bonds. Rising inflation erodes the value of a bond’s future fixed interest payments, making them less appealing to investors. That translates into falling bond prices and rising mortgage rates. Therefore, weak readings would be favorable for the bond market and mortgage shoppers.
Overall, Wednesday is the key day of the week due to the Fed schedule, but tomorrow could be a bit active also. It is highly probable that this will be a highly volatile week for the mortgage market, especially since the lightest day is already very active. Therefore, please maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.