Monday's bond market has opened in negative territory despite another round of stock market losses. The major stock indexes are kicking the week off with sizable losses. The Dow is currently down 160 points while the Nasdaq has fallen 30 points. The bond market is currently down 15/32, which will likely push this morning's mortgage rates higher by approximately .375 of a discount point.

There is no relevant economic news scheduled for release today. The rest of the week brings us the release of five economic reports for the markets to digest. Three of them are considered to be of low importance and likely will have little impact on mortgage rates. With none of the data being released until Wednesday, we will likely see the most activity in rates the latter part of the week.

The first piece of data comes Wednesday morning with the release of August's Existing Home Sales report. The National Association of Realtors posts this data, giving us an indi cation of housing sector strength by tracking home resales in the U.S. It is expected to show a decline from July's sales, however, this data is not considered to be of high importance to the bond market.

August's Durable Goods Orders will be posted early Thursday morning. This report gives us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. Current forecasts call for a drop in orders in the neighborhood of 1.3%. A larger decline could help bond prices and cause mortgage rates to drop Thursday. However, a smaller than expected decrease would indicate a stronger than expected manufacturing sector and would likely help push mortgage rates higher.

Also Thursday morning will be the release of August's New Home Sales. It is expected to show that sales of new homes rose slightly in August. As with Wednesday's Existing Home Sales data, this report will likely not have a significant impact on mortgage ra tes.





The first of Friday's two releases is the final revision to the 2nd Quarter Gross Domestic Product (GDP). Since this data is aged now and the preliminary reading of the 3rd Quarter GDP will be released next month, I don't see this revision having much of an impact on the financial markets or mortgage pricing. It is expected to show a slight increase from the previous estimate of a 3.3% annual rate.

The final report of the week is Friday's release of the University of Michigan's Index of Consumer Sentiment. This is the revised reading for September. The preliminary reading that was released earlier this month revealed a 73.1 reading. Analysts are expecting to see a downward revision, meaning confidence was not as higher as previously thought. A lower than expected reading should help improve mortgage rates Friday morning.

Mark Betteker

This week brings us the release of four pieces of economic data, with three of them likely to affect mortgage rates. There is no relevant data scheduled for release until Thursday and the most important reports are all scheduled for release Friday. Therefore, look for the biggest changes to rates the latter part of the week.

The first report of the week is not considered to be of high importance. July's Goods and Services Trade Balance data will be posted Thursday morning, giving us the size of the U.S. trade deficit. It is expected to show a deficit of approximately $58.0 billion, which would be an increase from June's $56.8 billion. However, I would consider this the least important of this week's releases, meaning it will likely have little impact on bond trading or mortgage rates.

Also worth noting is the 10-year Treasury Note auction Thursday. It is fairly common to see some weakness in bonds before these sales as investors prepare for them. But, if the sales are met with a decent demand from investors, those losses are normally recovered after the results are announced. The results will be posted at 1:00 pm ET Thursday. If demand was strong, particularly from international investors, we should see mortgage rates improve Thursday afternoon.





Friday brings us the release of three pieces of relevant data. The first is the release of August's Retail Sales report. It will give us a measurement of consumer spending, which is very important to the markets because consumer spending makes up two-thirds of the U.S. economy. Current forecasts are calling for a 0.1% increase in sales. If we see a higher level of spending than is forecasted, the bond market will most likely fall and mortgage rates will rise. However, a weaker than expected reading could push bond prices higher and mortgage rates lower Friday.

The second important piece of data Friday morning is the release of Augus t's Producer Price Index (PPI). This report will give us a very important measurement of inflationary pressures at the producer level of the economy. There are two readings that analysts follow in this release. They are the overall index and the core data reading. The core data is the more important of the two because it excludes more volatile food and energy prices. Analysts are currently calling for a 0.3% decline in the overall index, and a rise of 0.2% in the core data. Stronger than expected readings could fuel inflation concerns in the bond market and lead to an increase in mortgage rates Friday morning.





The last report of the week comes from the University of Michigan. Their consumer sentiment index will give us an indication of consumer confidence, which hints at consumers' willingness to spend. If confidence is rising, consumers are more apt to make large purchases. But, if they are growing more concerned of their personal financial si tuations, they probably will delay making that large purchase. This influences future consumer spending data and can impact the financial markets. It is expected to show a reading of 63.9.

Overall, the latter part of the week will likely be pretty active for the bond market and mortgage rates. Friday's Retail Sales and PPI reports are the week's most important and make Friday the biggest day of the week. If we see weaker than expected readings in that data, we should see mortgage rates move lower for the week. However, stronger than expected readings will likely drive bond prices lower and mortgage rates higher.

I am holding the float recommendations for now, but could change if there is a lackluster interest in the 10-year auction or if Friday's data shows stronger than expected results. We may also see the stock markets significantly influence bond trading, so look for sizable movement in the major indexes to also lead to a possible change in recomme ndations. This weekend's news about the Fed taking control of Fannie Mae and Freddie Mac will likely drive their stock prices lower and could affect the broader markets. That may start the week off with lower mortgage rates.

If I were considering financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.