Monday’s bond market has opened the week in positive territory. The stock markets are doing the same with the Dow up 53 points and the Nasdaq up 1 point. The bond market is currently up 3/32 (1.92%), which should improve this morning’s mortgage rates by approximately .125 of a discount point if comparing to Friday’s morning pricing.
Today’s only economic data came from the National Association of Realtors, who announced that sales of existing homes rose 1.2% last month. This was close to expectations and hasn’t had much of an impact on today’s bond trading or mortgage pricing. Generally speaking, housing sector strength is negative news for bonds and mortgage rates, but this was not enough of a variance from forecasts to influence this morning’s rates.
February’s Consumer Price Index (CPI) will be released at 8:30 AM ET tomorrow, which measures inflationary pressures at the very important consumer level of the economy. Its results are watched closely by bond market traders and analysts because rising inflation makes long-term securities such as mortgage-related bonds less appealing to investors and may alter the Fed’s timeline for raising short-term rates. It is expected to show a 0.2% increase in the overall index and a 0.1% rise in the more important core data that excludes more volatile food and energy prices. If we see weaker than expected readings like we did in its’ sister release Producer Price Index (PPI), bond prices should rise and mortgage rates will likely fall early tomorrow.
Also tomorrow morning, the Commerce Department will give us February’s New Home Sales figures. They are expected to announce a decline in sales of newly constructed homes. This report tracks a much smaller percentage of home sales than Monday’s Existing Home Sales report covered, so it should have a much weaker influence on the markets and mortgage pricing. A large increase in sales would be negative for the bond market and mortgage pricing because it would point towards economic strength.
Overall, I believe tomorrow will be the most active day for mortgage rates this week with multiple reports but Wednesday’s sole report is arguably the most important of the week so it could be an active day also. I am expecting to see a much calmer week for rates this week than we saw last week. Still, with events set for each day, we still could see movement in rates for the week. Accordingly, please maintain contact with your mortgage professional if still floating an interest rate.