Wednesday’s bond market initially opened in positive territory but has since slipped into negative ground despite favorable economic news. The stock markets are showing relatively minor losses during early trading with the Dow down 35 points and the Nasdaq down 21 points. The bond market is currently down 3/32 (1.88%), but due to strength late yesterday we may still see a slight improvement in this morning’s mortgage rates.
February’s Durable Goods Orders report was posted at 8:30 AM ET this morning. The Commerce Department announced a 1.4% decline in new orders for big-ticket products. Because analysts were expecting a small increase, we can consider the data favorable for bonds and mortgage pricing. However, since this data is known to be quite volatile from month to month, today’s variance was not actually as significant as it may appear to be. That has limited its impact on today’s rates.
Also today is the first of this week’s two Treasury auctions that have the potential to affect mortgage rates. 5-year Notes are being sold today while 7-year Notes will be auctioned tomorrow. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions to mortgage rates. However, strong sales usually make bonds more attractive to investors and bring more funds into the bond market. The buying of bonds that follows often translates into lower mortgage rates. Results of today’s sale will be posted at 1:00 PM ET, so if there is a reaction it will come during early afternoon trading.
The only economic data set for release tomorrow is last week’s unemployment figures at 8:30 AM ET. They are expected to show that 290,000 new claims for unemployment benefits were filed last week. This would be a slight change from the previous week’s 291,000 initial claims, indicating little change in the employment sector last week. Because rising claims hint at a weakening labor market, the higher the number of new claims the better the news it is for bonds and mortgage rates.