Monday’s bond market has opened in negative territory as the downward momentum continues. The major stock indexes are starting the week mixed with the Dow up 17 points and the Nasdaq down 20 points. The bond market is currently down 10/32 (1.91%), which should push this morning’s mortgage rates slightly higher than Friday’s morning pricing. Gains late Friday are helping to prevent more of a move in today’s rates.
There is nothing scheduled for release today that is expected to influence mortgage rates. In fact, there is no relevant monthly or quarterly economic reports for the markets to digest this week. There are two Treasury auctions scheduled that are likely to have an impact on mortgage rates the middle part, but other than that we can expect stocks to be the most likely force behind a noticeable movement in rates.
If stocks post sizable gains, bonds are likely to move lower. Since bond prices and yields move in opposite directions, this could lead to higher mortgage rates. The benchmark 10-year Treasury Note yield is currently at 1.91%. That is well above the multi-year low of 1.64% that we saw last month but still below a very important threshold of 2.00%. There is a possibility of seeing the yield improve a little in the near term, but I fear we are headed back above 2.00% before too long. If that level is broken, yields and mortgage rates are likely to continue to rise. Therefore, I am maintaining my conservative stance towards locking an interest rate if closing soon. At least for the time being.
Overall, I would label Wednesday as the most important day of the week due to the 10-year Note auction. However, significant movement in stocks could drive bond and mortgage rate direction any day. Accordingly, please stay in contact with your mortgage professional if still floating a rate and closing in the near future.