Wednesday’s bond market opened in positive territory due to strength in overnight bond trading from overseas, but have since given back some early gains. The stock markets are showing minor improvements with the Dow up 8 points and the Nasdaq up 3 points. The bond market is currently up 7/32 (2.46%), which should improve this morning’s mortgage rates by approximately .125 of a discount point.
There is nothing being posted or taking place today that is expected to affect mortgage rates. It is likely that any intraday movement in rates will probably be a result from changes in stocks. If the major stock indexes rally and move higher, bond yields and mortgage rates may follow suit. However, if stocks fall into negative territory, bonds should benefit.
It is worth noting that this morning’s early bond gains pushed the benchmark 10-year Treasury Note yield down to 2.44% before retreating to its’ current level. The 2.44% is a pretty strong resistance level, meaning if it doesn’t break below almost immediately, there is a pretty good chance of seeing yields and mortgage rates move higher in the coming days. I don’t see the 10-year yield remaining between 2.44% and 2.50%. I believe we will see a move above 2.50% (bad for rates) or a rally to break below 2.44% (lower mortgage rates). Although, the risk of an upward move is much stronger than the likelihood of a downward move, in my opinion.
Tomorrow’s only relevant economic data is last week’s unemployment figures. They are expected to show that 306,000 new claims for unemployment benefits were filed. This would be an increase from the previous week’s total of 302,000. Rising claims is a sign of a softening employment sector. Therefore, the higher the number of new claims, the better the news it is for the bond market and mortgage rates. However, because this is just a weekly snapshot rather than a monthly report, it usually takes a wide variance from forecasts for the data to directly affect mortgage rates.