Monday’s bond market has opened in positive territory despite a calm open in stocks and no relevant economic data set for release today. The major stock indexes are showing minor gains of 15 points in the Dow and 13 points in the Nasdaq. The bond market is currently up 6/32 (1.74%), which should improve mortgage rates by approximately .125 of a discount point if comparing to Friday’s early pricing.
Today is the only day of the week with nothing scheduled for release that is relevant to mortgage rates. The rest of the week has six reports for the markets to digest with two being considered highly important. The most important data comes tomorrow and Friday, but sizable moves in stocks can impact bond trading and mortgage rates any day.
The Institute for Supply Management (ISM) will release their manufacturing index for February late tomorrow morning. This index measures manufacturer sentiment and can have a pretty large impact on the financial and mortgage markets if it varies from forecasts. It is expected to show an increase from January’s 48.2 to 48.7 this month. This is important because a reading below 50.0 means more surveyed manufacturers felt business worsened during the month than those who felt it had improved. A sub-50 reading is considered a recessionary sign. If we see a weaker than expected reading, the bond market could rally. But, a much higher than forecasted reading, particularly above 50.0 could lead to heavy selling in bonds, causing mortgage rates to rise Tuesday morning. One of the reasons this data is considered so important is the fact that it is usually the first monthly report posted that covers the preceding month. It is traditionally posted the first business day of the month, allowing for a current snapshot of conditions in the manufacturing sector.
Overall, look for a fairly active week in the markets and mortgage rates, especially the early and latter days. Friday is the most important day of the week due to the significance of that day’s data but we could also see a noticeable move in rates Tuesday. With data or relevant reports being posted four of five days and some of that data considered key, it would be prudent to maintain contact with your mortgage professional if still floating an interest rate and closing soon.