Monday’s bond market has opened down slightly with stocks starting the week in positive territory. The major stock indexes are showing relatively minor gains of 42 points in the Dow and 24 points in the Nasdaq. The bond market is currently down 3/32, which should put this morning’s mortgage rates about .125 of a discount point higher than Friday morning’s pricing. Part of that increase is from weakness late Friday.
Today has nothing of importance scheduled and with the geopolitical front quiet for the most part, stocks are left to drive bond trading and mortgage rate direction. The rest of the week brings us the release of four pieces of monthly economic data in addition to two Treasury auctions that have the potential to affect mortgage rates. Despite the fairly low number of reports, we still will likely see a fair amount of movement in the markets and mortgage pricing due to the importance of those economic reports and the likelihood of the geopolitical and financial issues being in the spotlight again. The economic data is set for the middle and late days of the week while the Treasury auctions will take place mid-week.
We will be watching the benchmark 10-year Treasury Note very closely this week. It closed below 2.44% Friday but well off lows of the day. With it currently at 2.43% it is pushing that 2.44% threshold that appeared to be so strong. A move back above likely means it will head towards 2.50%, bringing mortgage rates higher with it. On the other hand, staying below 2.44% gives us a lot of optimism that it will move lower and improve mortgage rates.
Overall, Friday is the best candidate to be labeled most important day with three of the week’s monthly economic reports scheduled, but we could see noticeable movement in rates Wednesday also since it has the single most important release of the week (Retails Sales) and the 10-year Note auction. The Treasury auctions raise the possibility of afternoon volatility in the middle days, although I would not be surprised to see afternoon changes to mortgage pricing other days also if the crises overseas remain volatile. Accordingly, I strongly recommend maintaining contact with your mortgage professional this week if still floating an interest rate and closing in the near future.