Princeton Capital Blog

This Week’s Market Commentary

March 26th, 2012

Monday’s bond market has opened in negative territory following early stock strength. The major stock indexes are starting the week off with gains of 112 points in the Dow and 26 points in the Nasdaq. The bond market is currently down 6/32, but we may still see a slight improvement in this morning’s mortgage pricing due mostly to strength late Friday.

There is no relevant economic data scheduled today, the only day of the week that there isn’t. Fed Chairman Bernanke had a speech early this morning, which did draw a little attention. However, his words weren’t new or surprising as they were a reminder of his current stance on the employment sector. He referenced the improving job market but reiterated that it still remains weak. That is more or less neutral for the bond market and mortgage rates.

The rest of the week has five economic reports scheduled reports that are considered relevant to mortgage rates in addition to two Treasury auctions that have the potential to swing bond trading enough to change mortgage rates. The first economic report come late tomorrow morning March’s Consumer Confidence Index (CCI) will be released. This index gives us an indication of consumers’ willingness to spend. Bond traders watch this data closely because consumer spending makes up over two-thirds of our economy.

If this report shows that confidence in their own financial situations is falling, it would indicate that consumers are less apt to make a large purchase in the near future. If it reveals that confidence looks to be growing, we may see bond traders sell as economic growth may rise, pushing mortgage rates higher tomorrow morning. It is expected to show a decline from February’s 70.8 reading to 70.1 for March. The lower the reading, the better the news for bonds and mortgage rates.

Overall, I expect to see the most movement in rates either tomorrow or Wednesday. Friday could also be a little active in terms of mortgage pricing. In general, it will probably be a pretty active week for rates. Accordingly, it would be prudent to maintain contact with your mortgage professional if still floating an interest rate. We saw some nice improvements last week, but not enough buying to convince me that rates are more likely to move lower than remain the same or move higher in the next week or so. Therefore, I am still holding the cautious approach towards rates for immediate term closings.

Princeton Capital

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