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Monday’s bond market has opened up slightly with stocks posting minor gains during early trading and today’s economic data showing no surprises. The Dow is currently up 34 points and the Nasdaq is up 2 points. The bond market is currently up 3/32 (2.70%), but due to strong selling late Thursday we should still see an increase of approximately .250 of a discount point if comparing to Thursday’s morning pricing.
The Conference Board gave us today’s only relevant data with the release of their March Leading Economic Indicators (LEI) at 10:00 AM ET. They announced a 0.8% increase that indicates a moderate to fairly strong rate of economic growth over the next several months. However, since that pegged forecasts, it has not had a negative impact on this morning’s mortgage rates.
The rest of the week brings us four more pieces of economic data for the markets to digest in addition to two potentially relevant Treasury auctions. March’s Existing Homes Sales numbers from the National Association of Realtors will be posted at 10:00 AM ET tomorrow. This report gives us an indication of housing sector strength and mortgage credit demand. It is also considered to be moderately important to the markets, but can influence mortgage pricing if it shows a sizable variance from forecasts. Ideally, the bond market would like to see a drop in home resales because a soft housing sector makes broader economic growth more difficult. Analysts are expecting to see little change in sales between February and March. The larger the increase, the worse the news it is for bonds and mortgage rates.
Overall, look for a fair amount of movement in the financial markets and mortgage rates this week. The single most influential economic report will likely be Thursday’s Durable Goods, but look for a surprise in tomorrow’s housing data to cause movement in rates also. This week is another filled with corporate earnings releases, so we need to watch for stock movement to also affect bond trading and mortgage rates. I am still holding the cautious stance towards rates until the 10-year yield gets closer to 2.80%.