Sample Commentary Report



Tuesday’s bond market has opened well in negative territory to start the week off with higher mortgage rates. Stocks are also beginning with losses, pushing the Dow down 204 points and the Nasdaq lower by 135 points. The bond market is currently down 34/32 (3.33%), erasing Friday’s late gains. This should cause an increase in this morning’s mortgage rates of approximately .375 of a discount point if compared to Friday’s early pricing. If you saw an intraday improvement before the markets closed for the Labor Day holiday, you should see a larger increase this morning than those who did not.

There is nothing of importance scheduled this morning that is expected to influence rates. We are likely seeing a negative reaction in bonds to OPEC’s announcement over the weekend that they will be cutting back on oil production by 100,000 barrels a day starting next month. This came as a surprise to the markets and could contribute to inflation concerns (oil prices are already higher this morning). Higher prices at the pump contribute to overall inflation that makes bonds less appealing to investors and leads to higher mortgage rates.

There is little scheduled for the rest of the week in terms of economic data to be concerned with. There are no monthly reports set for release that we regularly follow. The scheduled events that are most likely to affect rates will come during the middle days.

What may draw the most attention this week (other than this morning’s sell-off) are the seven speaking engagements by current Fed members. Three are scheduled tomorrow, two Thursday and two Friday, with Fed Chairman Powell scheduled for Thursday at 9:10 AM ET. Traders always watch these speeches, but when there is little else to drive trading, they have the potential to influence rates more than usual. Key points market participants will be looking for are comments on monetary policy, inflation and overall economic activity, particularly employment strength.

The Federal Reserve will release its Beige Book at 2:00 PM ET tomorrow. This report details current economic conditions in the U.S. by Federal Reserve regions. It is believed to be a key source of data when the Fed meets for their FOMC meetings and is usually released approximately two weeks prior to each meeting. If it reveals any significant surprises or changes from the previous release, we may see movement in the markets and mortgage pricing as analysts adjust their theories on the Fed’s future actions to control inflation.

If I were considering financing/refinancing a home, I would…. Lock 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…







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