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Friday’s bond market has opened flat with nothing to drive trading this morning and stocks mixed during early trading. The Dow is currently up 77 points while the Nasdaq has lost 8 points. The bond market is currently nearly unchanged from yesterday’s close, but we should still see an improvement of approximately .125 of a discount point in this morning’s mortgage rates due to strength late yesterday.
With nothing of importance scheduled for today other than a couple of Fed member speaking engagements, we can expect stock movement to be the biggest influence on bond trading and mortgage rate movement. If we see an intra-day revision to mortgage rates it will likely be a result of a noticeable move upward or downward in the major stock indexes. If stocks move higher, we will probably see bond yields and mortgage rates follow suit.
In a bit of encouraging news for mortgage shoppers, the benchmark 10-year Treasury yield seems to be forming a resistance level at 2.80%. We haven’t had anything significant to really fuel selling or buying in bonds since Wednesday afternoon, so it is a bit premature to rely on it. This morning’s open has it just below 2.77%. If 2.80% turns out to be a resistance level, it would narrow its recent range we use to help predict mortgage rate direction. That would also make a downward move in rates a little more likely than if 2.90% was the upper end of our current range. Again, this may be premature but I am watching it closely and may adjust recommendations in the immediate future based partly on that theory.
Next week brings us the release of a handful of economic reports for the markets to digest in addition to two potentially influential Treasury auctions. Some of the data is more important than others but none are considered to be key releases. Monday is the only day of the week with nothing scheduled so we can expect stock movement and any weekend geopolitical news to drive bond trading and mortgage rates until the calendar starts Tuesday.