Tuesday’s bond market has opened up slightly following favorable housing-related news. Stock are showing sizable losses during early trading with the Dow down 150 points and the Nasdaq down 9 points. The bond market is currently up 2/32 (2.06%), which should keep this morning’s mortgage rates at yesterday’s levels.
The Commerce Department announced early this morning that groundbreakings of new homes fell 17.0% in February, dropping them to their lowest level since January of last year. This was a much larger drop than many had thought, indicating that the new home portion of the housing sector was weakening. However, a good part of the decline is being attributed to bad weather, meaning many analysts are expecting a rebound in March’s numbers. The initial reaction to the news was positive in bonds, but they have lost their momentum since the news first broke. This is especially true when the size of this morning’s stock losses are taken into consideration that normally would be a boost for bonds.
Tomorrow has no relevant economic data scheduled for release but it does have several Fed events that are expected heavily influence the markets and mortgage pricing. They start with the 2:00 PM ET adjournment of the two-day FOMC meeting that begins today. It is widely expected that Fed Chair Yellen and friends will not change key short-term interest rates at this meeting, although market participants will be watching the post-meeting statement closely for changes in verbiage that could indicate when their first move will take place. Any surprises on this could heavily influence the markets and mortgage rates tomorrow afternoon.
The FOMC meeting is ending a little earlier than the traditional 2:15 PM because it is one of the meetings that will be followed by a press conference with Chairman Yellen. The meeting will adjourn at 2:00 PM while the press conference will begin at 2:30 PM. The Fed will also update their economic and monetary policy projections during this time. Any significant revisions to the Fed’s outlook on unemployment, GDP growth or their timetable for keeping key rates at current levels will also cause volatility in the markets and mortgage rates late tomorrow.