Friday’s bond market has opened in negative territory as the overall negative tone in bonds continues. Stocks are not helping bonds this morning either with the Dow up 94 points and the Nasdaq down 8 points. The bond market is currently down 12/32 (2.45%), which should push this morning’s mortgage rates higher by approximately .250 of a discount point.
Yesterday’s 7-year Treasury Note auction was not any better than Wednesday’s 5-year Note sale with several benchmarks that we use to gauge investor interest in the securities showing lackluster demand. Despite this news, the bond market actually improved a little late yesterday. That move wasn’t enough to cause widespread rate improvements but some lenders did likely revise rates slightly lower during afternoon trading. Therefore, just how much of an increase you will see in this morning’s rates depends a lot on whether or not your lender made an adjustment Thursday afternoon.
Today’s only relevant economic data came late this morning when the University of Michigan’s revised Index of Consumer Sentiment for May was posted. It showed a reading of 96.1 that was an upward revision from the preliminary reading two weeks ago and was higher than forecasts. Analysts were expecting it to remain at 94.6, indicating that surveyed consumers were more optimistic about their own financial and employment situations than many had thought. That makes the data bad news for bonds and mortgage rates because rising confidence levels usually means consumers are more apt to spend money, fueling economic growth.
Next week does not have a large number of economic reports scheduled for release, but some of what is being posted is highly important to the financial and mortgage markets. In addition, it will be a holiday-shortened week with an early close and full day closure for the bond market in observance of the Independence Day holiday. Look for details on next week’s activities and the holiday trading schedule in Sunday evening’s weekly preview.