Tuesday’s bond market has opened in positive territory despite early gains in stocks and no relevant economic data being posted. The Dow is currently up 51 points while the Nasdaq is up 41 points. The bond market is currently up 7/32 (2.15%), but due to weakness in trading late yesterday, we will likely still see a slight increase in this morning’s rates if comparing to Monday’s morning pricing.
There is nothing of importance set for release today that deserves our attention. Watch for stocks to affect bond trading and be the cause if we get an intraday revision to rates today. If the major indexes extend this morning’s gains, I would not be surprised to see bonds come under pressure. On the other hand, if stocks fall from current levels, bonds should benefit.
Tomorrow morning also has nothing of importance scheduled. However, the afternoon brings us two events that we need to watch. Tomorrow’s 10 year Treasury Note sale and Thursday’s 30-year Bond auction have the potential to influence rates. Tomorrow’s sale is the more important of the two. If the sales are met with a strong demand from investors, we should see the bond market move higher during afternoon trading the days of the auctions. But a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader bond selling. The selling in bonds would result in upward revisions to mortgage rates. Results will be posted at 1:00 PM ET each day, so any reaction will come during early afternoon trading.
The first economic report of the week will be the Federal Reserve’s Beige Book at 2:00 PM ET tomorrow. This report is named simply after the color of its cover and details economic conditions throughout the U.S. by Fed region. Since the Fed relies heavily on it during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any surprises, particularly regarding inflation, unemployment or future hiring. Any reaction to the report though will also come during mid-afternoon afternoon trading.