Friday’s bond market has opened in positive territory even though stocks are showing minor gains. The Dow is up 38 points while the Nasdaq has gained 13 points. The bond market is currently up 4/32 (2.26%), but I don’t believe we will see much of a change in this morning’s mortgage rates due to a little weakness late yesterday.
September’s New Home Sales report at 10:00 AM was today’s only relevant economic data. The Commerce Department reported that sales of newly constructed homes rose 0.2% last month. This was a stronger monthly move than the decline that was expected. However, that difference is due to a sizable downward revision in August’s sales that allowed for the small increase from August to September. The number of sales fell short of analysts’ forecasts, making the data slightly positive for the bond and mortgage markets. Unfortunately, this data is not important enough to affect rates with that size of a variance.
If we see an intraday revision to mortgage rates, it will likely be a result of a noticeable move in stocks. If the major stock indexes extend their current gains, bonds could come under pressure, leading to an upward revision to rates later today. On the other hand, stock weakness should favor bonds and possibly cause rates to improve slightly this afternoon.
Next week is very busy with several important economic releases, including the preliminary GDP reading for the 3rd quarter. In addition to the data and a couple of Treasury auctions, there is another FOMC meeting taking place. There is nothing of relevance set for Monday, but we still may see movement in the markets and rates as investors prepare for the week’s activities. Look for details on those events in Sunday evening’s weekly preview.