Real Estate & Mortgage Market Update

Monday’s bond market has opened in positive territory, extending Friday’s late strength. The stock markets are mixed with the Dow up 10 points and the Nasdaq down 13 points.

The Commerce Department announced late this morning that November's Factory Orders rose 1.8%, nearly matching expectations. The increase hints at manufactur

ing sector growth, but since it was very close to forecasts it has not had an impact on this morning’s bond trading or mortgage rates. In fact, the bond market was in positive ground during early morning trading, before this data was posted and had no reaction to the news.

The rest of the week brings us only two monthly reports, only one of which is relevant to the bond market and mortgage rates. In addition to the couple of economic reports scheduled, we also will get the minutes from the last FOMC meeting and two Treasury auctions that have the potential to influence the bond market and quite possibly mortgage rates the middle part of the week.

November's Goods and Services Trade Balance will be posted early tomorrow morning. It measures the size of the U.S. trade deficit and is expected to show a $40.4 billion deficit. This data usually does not directly affect mortgage rates, but it does influence the value of the U.S. dollar versus other currencies. A stronger dollar makes U.S. securities more attractive to international investors because they are worth more when sold and converted to the investor's domestic currency. But unless we see a significant variance from forecasts, I don't believe this data will lead to a change in mortgage rates tomorrow.

Overall, Friday is the key day of the week with the almighty Employment report being posted, but Wednesday afternoon also has a chance to be pretty active. The least active day will likely end up being tomorrow and Thursday doesn’t have too much to be concerned about either. The benchmark 10-year Treasury Note yield is currently at 2.96%. I will be watching it very closely for mortgage rate direction over the next several weeks. It has been in a tight range between 2.95% and 3.00%. If we could get enough favorable news to push it below 2.95%, we should see a noticeable downward move. Since mortgage rates follow bond yields, that would be good news for mortgage shoppers. On the other hand, breaking above 3.00% and staying above could indicate a sharp upward move in rates over the next couple weeks.

If you are still looking to lock in an a low interest rate you may consider doing so tomorrow. Stay focused.