Tuesday’s bond market has opened down slightly with stocks showing sizable gains during early trading. The Dow is currently up 165 points while the Nasdaq has gained 29 points. The bond market is currently down 3/32 (1.76%), which may push this morning’s mortgage rates slightly higher than Monday’s morning pricing.
There is nothing of importance scheduled for release today or tomorrow morning. If we see bonds move enough to affect rates, it will likely be a result of a change in stocks. If the major stock indexes extend this morning’s gains, we could see more pressure build in bonds that lead to a slight upward revision to mortgage pricing. On the other hand, if stocks give back a good portion of their early strength, bonds and mortgage rates could improve later today.
While there is no relevant economic data set for release tomorrow, we do have the first of this week’s two Treasury auctions that are likely influence rates. The Treasury will hold a 10-year Note sale tomorrow and a 30-year Bond sale Thursday. Results of the auctions will be posted at 1:00 PM ET each day. If they are met with a strong demand from investors, we could see bond prices rise enough during afternoon trading to cause downward revisions to mortgage rates. However, lackluster bidding in the sales, meaning longer-term securities are losing their appeal, could lead to higher mortgage pricing those afternoons.
We do have some important economic data for the markets to digest, but it does not come until Friday morning. They include a key consumer spending reading and an inflation reading at the producer level of the economy. The Treasury auctions could affect rates until we get to the week’s data as participating firms sometimes sell holdings before these sales and rebuy after if they went well. But I am still expecting to see the most movement in rates Friday.