Monday’s bond market has opened in negative territory as news out of Greece of a potential bailout resolution is fueling selling. Stocks are reacting to the news positively with the Dow up 187 points and the Nasdaq up 57 points. The bond market is currently down 11/32 (2.44%), which should push this morning’s mortgage rates higher by approximately .125 – .250 of a discount point if comparing to Friday’s morning pricing.
There is nothing of relevance scheduled for release today in terms of economic reports. The markets are reacting to the Greece news. The proposal still must pass their Parliament, meaning we may see more volatility until then. There is some question if it will pass or not based on previous actions so stay tuned for further info.
The rest of the week brings us the release of seven relevant economic reports for the bond market to digest in addition to semi-annual congressional testimony by Fed Chair Janet Yellen. A couple of the economic reports are considered to be of high importance, meaning we will likely see more volatility in the financial markets and mortgage pricing over the next several days. There are also some more heavily watched corporate earnings releases scheduled for the stock markets this week that can influence stock trading and therefore, bond and mortgage pricing. And we also have the Greece and China financial situations to watch. In other words, we are likely in for another very active week for mortgage rates.
June’s Retail Sales report will start the week’s activities at 8:30 AM ET tomorrow morning. This data is considered to be of high importance because it measures consumer spending. Consumer spending makes up over two-thirds of the U.S. economy, so any related data is watched closely. The Commerce Department is expected to say that sales at retail level establishments rose 0.3% last month. A larger than expected increase in sales will likely cause bond selling and lead to higher mortgage rates since it would mean consumers are spending more than thought. That would point towards economic growth that makes bonds less attractive to investors.
Overall, I am expecting Wednesday to be the key day of the week due to the number of economic reports scheduled and day one of the Fed congressional testimony. Thursday could be the calmest day, but the overseas issues and stock swings here can heavily influence the markets at any time, so please proceed carefully if still floating an interest rate and closing in the near future.