Friday’s bond market has opened well in positive territory despite a lack of relevant economic data. The stock markets are showing minor losses with the Dow down 38 points and the Nasdaq down 13 points. The bond market is currently up 19/32 (2.26%), which should improve this morning’s mortgage rates by approximately .250 of a discount point.
There is nothing of importance being release today that is expected to affect mortgage rates. That creates some confusion about today’s move in my opinion, especially with the benchmark 10-year Treasury Note yield falling below 2.30%. Is this a fool’s rally, only to be reversed next week? Or is this the beginning of sizable downward move in yields and mortgage rates? Time will tell, although I am leaning towards the conservative side on rate direction for the time being. In other words, enjoy today’s rally if you have not locked a rate yet, but proceed very cautiously. It will be a quick move back to 2.35% and above if indeed today’s gains are only temporary.
Next week brings us a handful or economic reports that may have an impact on mortgage rates. None of them are considered key reports or are likely to be a market mover. Some are more important and influential than others though and there is data scheduled each day. There are also a couple of Treasury auctions set for the middle part of the week that have the potential to influence afternoon pricing.
Monday does have data set with the release of May’s Existing Home Sales report. The National Association of Realtors posts this data monthly, giving us a measurement of housing sector strength. Look for details on it and the rest of next week’s activities in Sunday evening’s weekly preview.