My Mortgage Blog

Monday's bond market as opened well in positive territory after news broke that there was a net gain in foreign holdings of U.S. Treasuries during June. The stock markets were unaffected by the news. The Dow and Nasdaq are both starting the week with 13 points gains. The bond market is currently up 20/32, which should improve this morning's mortgage rates by approximately .125 - .250 of a discount point from Friday's morning rates.



There is no relevant economic data scheduled for release today, but three of the week's four reports will be posted tomorrow morning. The first is July's Producer Price Index (PPI) that gives us an indication of inflation at the producer level of the economy. There are two readings in the report- the overall index and the core data reading. The core data is more important because it excludes more volatile food and energy prices that can change significantly from month to month. Current forecasts call for a n increase of 0.2% in the overall and a 0.1% increase in the core data reading. A larger increase in the core data could push mortgage rates higher Tuesday morning. If it reveals weaker than expected readings, we may see mortgage rates improve as a result.



The second report of the day is July's Housing Starts data. This report gives us an indication of housing sector strength and future mortgage credit demand. However, it isn't considered to be of high importance to the bond market or mortgage pricing and usually doesn't cause much movement in mortgage rates unless it varies greatly from forecasts. It is the least important of the week's reports and is expected to show a small increase in construction starts of new homes. The lower the number of starts, the better the news for the bond market, as it would indicate a weaker than expected housing sector.



July's Industrial Production is the third. It gives us a measurement of man ufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is considered to be moderately important to the markets, but will likely not have much if an impact on mortgage rates due to the importance of the PPI reading. Current forecasts are calling for a 0.6% increase in production.



Overall, look for tomorrow to be the busiest day of the week, although today's activity was a pleasant surprise. The rest of the week will likely be influenced more by stock prices than anything else, which may be quite volatile. Therefore, keep an eye on the markets and maintain contact with your mortgage professional if you have not locked an interest rate yet.