December 28th, 2020 1:23 PM by T. Fanning
Last Updated: 12/28/20Monday's bond market has opened in negative territory, apparently in response to President Trump signing the government funding and coronavirus aid bill last night. Stocks are showing early gains of 250 points in the Dow and 65 points in the Nasdaq. The bond market is currently down 10/32 (0.95%), but fortunately gains from late Thursday should help keep this morning's mortgage rates nearly unchanged. The financial and mortgage markets were closed Friday for Christmas Day.News that President Trump did indeed sign the government funding and coronavirus aid bill last night is the apparent force behind today's negative open in bonds. The fact that the presented bill was signed without the higher payments he demanded a few days ago should be, by theory at least, favorable news for bonds and mortgage rates. A larger amount in the package would mean more support for the economy and more debt issued to fund it, both negatives for the bond market. However, the reaction this morning is the opposite with stocks up, bonds down and what would have been mortgage rates higher had it not been for strength as the markets were closing for the holiday last week.There is no relevant economic data set for release today, but we do have the 5-year Treasury Note auction to watch this afternoon. These sales influence general bond market sentiment, not mortgage pricing directly. If there is little interest in the securities, we could see broader selling in the bond market that possibly leads to an upward revision in mortgage rates. On the other hand, strong investor demand usually makes bonds more attractive to investors, translating into slightly lower mortgage rates. Results of the sale will be posted at 1:00 PM ET. If there is a reaction, it will be minor and should come shortly after those results are posted. This scenario will repeat itself tomorrow for the 7-year Note auction.The remainder of this holiday-shortened week doesn't bring us much to be concerned with either. It has no monthly or quarterly economic reports scheduled that usually have an influence on rates. Besides the two Treasury auctions reference above, the only other scheduled event that we will be watching is the weekly unemployment update Thursday morning.This week has nothing scheduled that makes it possible to label any particular day more or less important for mortgage rates. With exception to year-end trading, we should see a relatively calm week in the bond market and mortgage pricing. Still, it would be prudent to keep an eye on them if still floating an interest rate and closing in the near future as they can get active without warning.If I were considering financing/refinancing a home, I would....Lock if my closing were taking place within 7 days...Lock if my closing were taking place between 8 and 20 days...Float if my closing were taking place between 21 and 60 days...Float if my closing were taking place over 60 days from now...This is only my opinion of what I would do if I was financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.**http://www.hlmcolorado.com/DailyRateAdvisory
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