Wednesday’s bond market has opened in positive territory even though there is little to drive trading this morning. The stock markets are relatively calm with the Dow up 15 points and the Nasdaq up 2 points. The bond market is currently up 7/32 (2.37%), which should improve this morning’s mortgage rates by approximately .125 of a discount point.
Today has no economic data being released that is expected to affect mortgage rates. However, it does have the first of this week’s two Treasury auctions that have the potential to affect bond trading and mortgage pricing. 5-year Treasury Notes are being sold today while 7-year Notes go tomorrow. Results of the auctions will be posted at 1:00 PM ET each day. If investor interest is strong, it is possible that the broader bond market will rally and mortgage rates could move lower during afternoon trading. However, a lackluster demand could lead to bond selling and higher mortgage rates later today and tomorrow afternoon.
Tomorrow morning does have some mortgage-relevant reports scheduled. The first is the first revision to the 2nd Quarter Gross Domestic Product (GDP) at 8:30 AM ET. The GDP is the total of all goods and services produced in the U.S. and is considered to be the best measurement of economic growth or contraction. This reading is the second of three that we see each quarter. Last month’s preliminary reading revealed that the economy grew at an annual rate of 4.0%. Tomorrow’s revision is expected to show no change to that estimate. A downward revision should help lower mortgage rates, especially if the inflation portion of the release does not get revised higher. On the other hand, an upward revision would indicate the economy was stronger than previously thought, making it bad news for mortgage rates. There will be a final revision issued next month, but it probably will have little impact on mortgage rates since traders will be more interested in the current quarter’s acti! vity.
Also at 8:30 AM tomorrow will be the release of last week’s unemployment figures. It is expected to show that 302,000 new claims for unemployment benefits were filed last week, up from 298,000 of the previous week. The higher the number of claims, the better the news it is for bonds and mortgage rates because rising initial claims is a sign of a weakening employment sector.