Tuesday’s bond market has opened in negative territory with stocks showing sizable gains and today’s sole economic report showing stronger than expected results. The major stock indexes are in rally mode, pushing the Dow higher by 179 points and the Nasdaq up 52 points. The bond market is currently down 13/32 (2.26%), but due to some strength late yesterday we should only see a slight increase in this morning’s mortgage pricing.
The Conference Board gave us this week’s only monthly data with the release of their Consumer Confidence Index (CCI) for December at 10:00 AM ET this morning. They announced a reading of 96.5 that exceeded forecasts by several points (93.5), indicating that surveyed consumers felt better about their own financial situations than many had thought. Because it is believed stronger confidence usually translates into higher consumer spending levels, this is bad news for bonds and mortgage rates.
We also have the first of this week’s two Treasury auctions that may influence rates taking place today. 5-year Notes will be sold today while 7-year Notes go tomorrow. If these sales are met with a strong demand, bond prices may rise enough to lead to improvements in mortgage rates shortly after the results are posted. But a lackluster investor demand may create bond selling and upward revisions to mortgage rates later today and/or tomorrow afternoon. Results will be announced at 1:00 PM, so any reaction will come during early afternoon trading.
There is no relevant economic data scheduled for tomorrow. I suspect it will be a fairly quiet day in the bond and mortgage markets except for possibly some year-end position selling or buying. Stocks could also affect which direction bonds and rates move tomorrow as can the Treasury auction.