Wednesday’s bond market has opened down slightly, extending yesterday’s afternoon selling. The stock markets are showing relatively minor losses with the Dow down 32 points and the Nasdaq down 16 points. The bond market is currently down 2/32 (2.31%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point.
We saw bonds turn south yesterday afternoon around the time the 5-year Treasury Note auction results were posted. It seemed like a bigger move than just a 5-year Note sale would justify, but the timing makes it appear directly connected. The sale did not go very well in terms of investor demand for the securities. That led to broader selling in the bond market and caused many lenders to revise rates higher during afternoon trading. If your lender did make an upward revision late Tuesday, you likely will see little change in this morning’s pricing.
There is no relevant economic data scheduled for release today. The only event that may influence bond trading and mortgage rates is the 7-year Treasury Note auction. After yesterday’s lackluster 5-year Note sale, we don’t have much to be optimistic about in today’s auction. If today’s sale also draws weak interest, we may see another round of afternoon pressure in bonds later today. However, I don’t believe it will be as noticeable as yesterday’s was. Ideally, we would like to see a strong demand from investors that could lead to an afternoon improvement in rates. Results will be posted at 1:00 PM ET, so any reaction will come during early afternoon trading.
Last week’s unemployment figures will be tomorrow’s only data, scheduled to be posted at 8:30 AM ET. They are expected to show that 270,000 new claims for unemployment benefits were filed last week. This would be an increase from the previous week’s 267,000 initial filings. The larger the number of new claims, the better the news it is for bonds and mortgage rates because rising claims hint at a softening employment sector.
Also worth noting is the fact the bond market will close at 2:00 PM ET tomorrow ahead of the New Year’s Day holiday, but the stock markets are scheduled to be open for a full day of trading. All banks and major U.S. financial markets will be closed Friday for the holiday and will reopen Monday morning for regular hours.