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Tuesday’s bond market has opened in negative territory even though stocks are showing early weakness. There is nothing of relevance being posted this morning to drive trading, but that hasn’t prevented a soft opening. The Dow is currently down 88 points while the Nasdaq has lost 18 points. The bond market is currently down 12/32, which will likely push this morning’s mortgage rates higher by approximately .250 of a discount point.
Tomorrow has one piece of economic data that has the potential to affect mortgage rates. It will come from the Conference Board, who is a New York-based business research group and not a governmental agency. They will post their Leading Economic Indicators (LEI) for September at 10:00 AM ET tomorrow. This report attempts to predict economic activity over the next three to six months. It is expected to show a 0.6% rise, indicating that the overall economy is likely to grow in the immediate future. Good news for the bond and mortgage markets will be a much smaller increase than forecasts. However, this data is not known to be highly influential on rates, so it will likely take a large variance from forecasts for it to affect mortgage pricing.
Thursday starts the big news for the week with the preliminary reading of the 3rd Quarter Gross Domestic Product (GDP) to be followed by October’s Employment report Friday morning. Both reports are considered key data and can create a great deal of volatility in the financial and mortgage markets. We could possibly see more movement in rates either of those days than we have during the first three days combined.
As suspected and previously mentioned, it appears that the benchmark 10-year Treasury Note yield is having a difficult time falling below 2.60% (currently 2.64%). The two highly important economic reports scheduled for later this week could easily change that, but it looks like there is a decent level of resistance in the market, preventing a move lower. Therefore, anything except much weaker than expected results from Thursday’s and Friday’s data could mean higher bond yields and another upward move in mortgage rates.