Mel's Blog

January 2010 Market News #2

January 6th, 2010 10:06 AM by Mel Samick

Tuesday's bond market has opened in positive territory again following early stock losses. The stock markets are showing minor losses with the Dow down 11 points and the Nasdaq unchanged. The bond market is currently up 55 basis points, which should again improve this morning's mortgage rates.

The positive mood in the bond market continues today despite stronger than expected results from November's Factory Orders report. The Commerce Department announced an increase of 1.1% in new orders for both durable and non-durable goods. This was twice the increase that expected and can be considered negative news for bonds and mortgage rates because it points towards a strengthening manufacturing sector. However, this data is not considered to be one of the more important reports we see each month, so its impact on today's trading and mortgage pricing has been minimal.

Tomorrow's only relevant event is the release of t he minutes from the last FOMC meeting. This will give market participants insight to the Fed's thinking and concerns regarding inflation and monetary policy. It is one of those pieces of information that may cause a great deal of volatility in the markets or be a non-factor, depending on what the minutes show. They will be released at 2:00 PM ET, so they shouldn't affect the markets or mortgage rates until afternoon hours.

We will likely see this afternoon's tone in bonds extend into tomorrow morning's trading unless the major stock indexes are showing sizable losses or gains. The release if the FOMC minutes is not one the reports that market participants hold positions until its release or make protective moves ahead of it. With no important economic data on the schedule for tomorrow morning, this afternoon's trading and the opening stock markets will likely drive bond trading and mortgage rates tomorrow until we get to the 2:00 PM release.

The final report of the week comes Friday morning when the Labor Department will post December's employment figures. The Employment report is considered to be one of the most important monthly releases we see. It gives us the national unemployment rate, the number of jobs added or lost during the month and average hourly earnings, which is a key measure of wage inflation. Its results are expected to heavily influence the markets and mortgage rates.

          Mel

Posted in:General
Posted by Mel Samick on January 6th, 2010 10:06 AM

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