November 13, 2012

This Week in the Market

Breaking News from the Trading Floor:

Rates since previous month: up

Rates since previous business day: unchanged

Rates since previous week: unchanged

Today’s bond market opened slightly positive even though stocks are showing noticeable gains. The Dow is currently up 79 points while the Nasdaq is up 4 points.

The bond market is currently up 3/32, but we may still see an increase of approximately.125 of a discount point in this morning’s mortgage rates, due partly to weakness in trading late Friday. The bond market was closed yesterday in observance of the Veterans Day holiday.

Look for the major stock indexes to drive bond trading the rest of the day. If stocks extend their current gains, we could see downward revisions to mortgage pricing later today. However, if stocks give back this morning’s gains, we should see bond prices improve and mortgage rates move lower this afternoon.

Rest of the Week and Extended Outlook:

Four monthly economic reports for the markets will be released this week. Tomorrow has three scheduled for release, including two of the week’s more important reports. The Commerce Department will give us October’s Retail Sales figures early tomorrow morning. This data measures consumer spending, which is considered extremely important to the markets because it makes up over two-thirds of the U.S. economy.

Tomorrow’s report is expected to show a .2% decline in retail-level spending, meaning consumers spent less last month than they did in September. An increase in spending would be considered negative news for bonds because increases in spending fuels an economic recovery and raises inflation concerns in the bond market. If tomorrow’s release shows a larger than expected decline in spending that indicates consumers spent less than anticipated, bonds should react favorably, pushing mortgage rates lower tomorrow morning. If it shows an unexpectedly increase, mortgage rates will likely move higher.

Keep an eye on the market to see how rates will react. For homeowners, this might be a good time to refinance. For renters, perhaps now is the time to consider buying in at these historically low rates.