Friday’s bond market has opened in negative territory despite favorable economic news. The stock markets are showing relatively minor gains with the Dow up 51 points and the Nasdaq up 14 points. The bond market is currently down 7/32 (2.01%), but due to afternoon strength yesterday I don’t believe we will see much of a change in this morning’s mortgage rates.
Yesterday’s 30-year Bond auction didn’t go as well as Wednesday’s 10-year Note sale did, but still showed a respectable level of investor interest. Bonds weakened a little following the results release before strengthening again during late afternoon trading. That late strength caused many lenders to improve rates approximately .125 of a discount point. Therefore, this morning’s weakness simply offsets or erases yesterday’s late gains, keeping mortgage rates close to Thursday’s morning pricing.
Today’s only relevant economic data was February’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment just before 10:00 AM ET. It showed a reading of 93.6 that was well below expectations and a sizable drop from January’s 98.1. This means surveyed consumers were less optimistic about their own financial and employment situations than many had thought. Because it is believed that will translate into softer consumer spending, we can consider the data good news for bonds and mortgage rates.
Next week is a holiday-shortened week with the U.S. financial and mortgage markets closed Monday for the President’s Day holiday. The week has a handful of releases scheduled that can influence mortgage rates, but they don’t start until mid-week. There is no early close today ahead of the holiday. However, it is common to see some defensive trading as traders look to protect themselves over the long weekend. This could mean some afternoon volatility in the markets that may trickle into mortgage pricing, so don’t be surprised to see slight movement in rates this afternoon. Look for details on next week’s events in Sunday evening’s weekly preview.