Mid-Day Market Update

Wednesday’s bond market has opened well in negative territory as it appears the 10-year Treasury Note is unable to stay under 2.50% (currently 2.57%). The stock markets are mixed again with the Dow down 55 points and the Nasdaq up 7 points. The bond market is currently down 18/32, which will likely push this morning’s mortgage rates higher by approximately .375 - .500 of a discount point if comparing to yesterday’s morning pricing.

The Commerce Department gave us this morning’s only U.S. economic report with the release of June’s New Home Sales data. They said late this morning that sales of newly constructed homes rose 8.3% last month, reaching their highest level in 5 years. That is a much larger increase than analysts were expecting to see, but part of the difference comes from a downward revision to May’s sales. Still, the report indicates that the new home portion of the housing sector was stronger than many had thought, making the data negative for the bond market and mortgage rates.

 

The Labor Department is expected to announce that 340,000 new claims for unemployment benefits were filed last week. This would be an increase from the previous week’s 334,000 initial claims, indicating the employment sector weakened last week. The higher the number of new claims for benefits, the better the news it is for the bond market and mortgage rates. Since this report tracks only a single week’s worth of new claims, its’ impact on the bond market and mortgage pricing is usually fairly minimal unless it shows a significant variance from forecasts.

 

Mortgage rates shot up after the Fed suggested a potential pullback on quantitative easing, but don't expect them to soar in the second half of 2013.

Instead, analysts see gradual growth when it comes to mortgage rates.

The market is seeing a lot of volatility due to the Fed's talks of tapering.

Rates will likely trend up, but won't spike, although there might be week-to-week changes

 

I strongly suggest locking and taking advantage of any rate float downs. Stay tuned