Monday’s bond market has opened in negative territory with stocks in rally mode this morning. The Dow is currently up 195 points while the Nasdaq has gained 65 points. The bond market is currently down 6/32 (1.76%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point over Friday’s morning pricing.
There is no relevant economic data set for release today. However, the rest of the week brings us seven economic reports to be concerned with in addition to two potentially relevant Treasury auctions. A couple of the reports are considered to be important to the markets and mortgage rates. With so much scheduled this week that can move rates, there is a strong chance of seeing a pretty active week in the mortgage market.
The first piece of data is January’s Existing Home Sales report by the National Association of Realtors late tomorrow morning. This data tracks home resales throughout the country, giving us a measurement of housing sector strength. It is expected to show a decline in sales of existing homes, meaning the housing sector softened last month. Ideally, the bond market would like to see a sizable decline in sales because weak housing makes broader economic growth more difficult. Since long-term securities such as mortgage bonds tend to thrive during weaker economic conditions, weak housing numbers would be good news for mortgage rates.
February’s Consumer Confidence Index (CCI) will also be posted at 10:00 AM ET tomorrow morning. This Conference Board index measures consumer confidence in their personal financial situations, giving us a measurement of consumer willingness to spend. If consumers are feeling good about their own financial and employment situations, they are more apt to make large purchases in the near future. Since consumer spending makes up over two-thirds of the economy, related data is considered important in terms of gauging economic activity. It is expected to show a decline in confidence from the 98.1 reading in January to 97.2 this month. A lower reading would be considered good news for bonds and mortgage rates since it would indicate consumers are less likely to make a large purchase in the near future than many thought.
Overall, I think Friday is the most important day of the week but Thursday may be pretty active also. The calmest should be today or Wednesday. If floating an interest rate, it would be extremely prudent to maintain contact with your mortgage professional this week as bond yields (and mortgage rates) could make a noticeable higher if a majority of the data does not show weaker than predicted results.