Wednesday’s bond market has opened in negative territory, extending late afternoon weakness that erased part of yesterday’s morning gains. The stock markets are fairly flat with the Dow down 4 points and the Nasdaq down 2 points. The bond market is currently down 9/32 (1.86%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point.
This morning has nothing scheduled for release that is expected to influence rates. We likely will be left to look to stocks for bond direction today. If the major stock indexes move noticeably higher or lower, we can expect bonds to move with them. Stocks gains generally equate to bond weakness and higher rates while stock selling makes an improvement to mortgage pricing more likely.
Today does bring us the first of this week’s two Treasury auctions that could potentially affect mortgage rates. That is the 10-year Treasury Note auction, followed by 30-year bonds tomorrow. Results of both sales will be posted at 1:00 PM ET on the sale days. If investor demand was high, we may see bonds rally during afternoon trading as it would hint that investors still have an appetite for longer-term securities. However, weak demand in the sales could lead to selling and an increase in mortgage rates late today and/or tomorrow.
Tomorrow also has last week’s unemployment update at 8:30 AM ET. It is expected to say that 275,000 new claims for unemployment benefits were filed last week, down a little from the previous week’s 278,000. Ideally, we want to see a large increase in initial claims because rising claims indicate a weakening employment sector. Since this report is only a weekly snapshot of the sector, it usually takes a wide variance from expectations for it to have an impact on mortgage rates. However, with no other data being posted this week, we may see a slightly bigger reaction than we usually do.