Thursday’s bond market has opened well in negative territory following a rebound in stocks. The major stock indexes are posting sizable gains, erasing a good part of yesterday’s losses. The Dow is currently up 187 points while the Nasdaq has gained 61 points. The bond market is currently down 20/32 (2.26%), which should keep this morning’s mortgage rates at yesterday’s morning levels. Most lenders revised rates lower late yesterday as bonds rallied. Unfortunately, this morning’s increase will likely be by the same amount, putting us back at Wednesday’s morning rates.
We had two factors lead to strength in bonds during afternoon trading yesterday. The first was the 10-year Note auction that went very well. Results that were posted at 1:00 PM ET showed investor demand for the securities was pretty strong. That allows us to be optimistic about today’s 30-year Bond auction. If it is also met with a high level of interest, we could see bonds and mortgage rates improve later this afternoon.
The second event of the afternoon was the release of the minutes from the last FOMC meeting at 2:00 PM ET. They indicated the Fed is more likely to make their first increase to key short-term interest rates a little later than many analysts were thinking. Before the minutes were posted, many thought that September was a realistic possibility for the Fed’s first move. Now many have adjusted their timeline to October or December’s FOMC meeting for the first move. The longer the Fed waits to make the increase, the better the news it is for bonds and mortgage rates.
Today’s only semi-relevant economic news was last week’s unemployment figures that showed 297,000 new claims for unemployment benefits were filed last week. This was an increase from the previous week’s revised total of 282,000 initial claims and well above the 276,000 that was expected. That makes the data good news for the bond market because rising claims indicates a softening employment sector. However, this is only a weekly snapshot so the markets sometimes don’t pay too much attention, particularly on volatile days such as today.
Tomorrow has no relevant economic data but Fed Chair Janet Yellen is speaking in Cleveland at noon ET. Market participants always listen when she speaks, so any surprises will cause a reaction in the markets and possibly mortgage pricing.