Tuesday’s bond market has opened in positive territory following early stock weakness. The stock markets are in selling mode during early trading, pushing the Dow lower by 227 points and the Nasdaq down 49 points. The bond market is currently up 3/32 (2.22%), which should improve this morning’s mortgage rates slightly if comparing to Monday’s early pricing.
There is nothing scheduled for release today or tomorrow morning that is expected to affect mortgage rates. This makes it more like that stocks will drive bond trading during that time. If stocks continue to move lower, bonds should benefit. That would lead to a slight improvement in rates later today. On the other hand, if stocks rebound it is likely that mortgage rates will move a little higher.
The first events of the week we need to deal with are the Treasury auctions tomorrow and Thursday. Tomorrow’s 10-year Note auction is the more important one and will likely have a bigger influence on mortgage rates. Results of the sales will be posted at 1:00 PM ET each day. If they are met with a strong demand from investors, particularly international buyers, we should see strength in the broader bond market and improvements to mortgage pricing during afternoon hours those days. On the other hand, a weak interest in the auctions could lead to upward revisions to mortgage rates.
We do have some important economic data ahead of us, but all of it comes Friday morning. We have three reports set for release Friday that include key consumer spending data and an important inflationary reading at the manufacturing level of the economy. Those reports paired for release at the same time can heavily influence the financial and mortgage markets. So, while it is a light and fairly calm week to date, be prepared for some volatility as the week ends.