Wednesday's bond market has opened up only slightly despite sizable stock losses and favorable results from this morning's economic news. The stock markets are well into negative territory with the Dow down 135 points and the Nasdaq down 30 points. The bond market is currently up 3/32, which will likely keep this morning's mortgage rates close to yesterday's leve ls.

The Labor Department reported this morning that worker productivity rose to a 4.9% annual rate during the 3rd Quarter. This was much higher than was expected, which good news for bonds. Also worth noting about the report was a decline in unit labor costs that eases wage inflation concerns. However, the bond market's reaction to the news has been tempered, preventing an improvement to mortgage pricing.

The early calm in bonds is likely a result of preparing for today's Treasury auction. Today is the first of the week's two relevant auctions with the 10-year Note sale today. The 30-year Bond auction is scheduled for tomorrow. Strong or particularly weak results from these sales could affect the momentum in the bond market and lead to afternoon changes in mortgage rates. Results of today's sale will be posted at 1:00 PM ET, so look for any reaction to come during afternoon trading.

Fed Chairman Bernanke will be speaking to the Joint Economic Commit tee tomorrow morning at 10:00 AM ET. He will be discussing the U.S. economic outlook, therefore, his words may cause volatility in the markets and possibly mortgage rates.

The final two releases of the week will be posted Friday morning. The first is Goods and Services Trade Balance report. It helps us measure the size of the U.S. trade deficit, but usually is not a major influence on bond trading or mortgage pricing. It does affect the value of the U.S. dollar, which makes U.S. securities more attractive to international investors when the dollar is strong. This is because the securities' proceeds are worth more when sold and converted to the investor's domestic currency. However, its results will not likely directly lead to changes in mortgage rates.

November's preliminary University of Michigan Index of Consumer Sentiment will be released during late morning trading. This index measures consumer confidence, which gives us an indication of consumer willingne ss to spend. It is expected to show a reading of 80.0, down from October's final reading of 80.9.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Lock 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.

Fed Chairman Bernanke suggested a new idea to fix the troubled market for mortgages too large for Fannie Mae and Freddie Mac to buy: allow the companies to securitize jumbos but have the federal government guarantee them. Fannie and Freddie currently can buy mortgages only up to $417,000, and so far Congress hasn't acted to lift that. As an alternative, Bernanke suggested that Congress could consider allowing the companies to buy mortgages of as much as $1 million from lenders, pay the government a fee for guaranteeing them and then turn them into securities to be sold to investors. But is the Federal government willing to take on additional credit risk in addition to FHA, VA, etc?

The House Committee on Financial Services approved the mortgage reform legislation and anti-predatory lending practices by a vote of 45 to 19. H.R. 3915, “The Mortgage Reform and Anti-Predatory Lending Act of 2007” will create a licensing system for residential mortgage loan originators, establish a minimum standard requiring that borrowers have a reasonable ability to repay a loan, and will attach a limited liability to secondary market securitizers. The legislation will also expand and enhance consumer protections for “high-cost loans,” will include protections for renters of foreclosed homes, and will establish an Office of Housing Counseling through the Department of Housing and Urban Development. From here it moves on to the full House.

Good news? Treasury yields continue to decline, and the 10-yr is down to 4.26% ahead of the three day weekend. (Mortgages, however, are unchanged, primarily because of continued nervousness about that sector, prepayment risk, and money manager’s books being set heading into year-end.) We had the September US trade deficit, as expected, and the Import Price Index which rose 9.0% year-over-year! Later we’ll see the preliminary University of Michigan Consumer Confidence number. The next meeting is on December 11th.