Monday’s bond market has opened in positive territory even though there is no relevant economic news to drive trading this morning. The major stock indexes are starting the week in negative ground with the Dow down 66 points and the Nasdaq down 32 points. The bond market is currently up 6/32 (2.24%), which should improve this morning’s mortgage rates by approximately .125 of a discount point from Friday’s levels.
This week brings us the release of six economic reports and two Treasury auctions for the bond market to digest in addition to another FOMC meeting, but none of them are set for today. The data scheduled this week ranges from moderately to extremely important, so some reports will have a much bigger impact on trading than others. We also need to keep an eye on the stock markets as they can be heavily influential on bond market direction and mortgage rates.
There are two reports scheduled for release tomorrow, starting with the Durable Goods Orders report for September at 8:30 AM ET. This report gives us a measurement of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items, or products that are expected to last three or more years. Analysts are currently calling for an increase in new orders of approximately 0.7%. If we see a much larger increase in orders, mortgage rates will probably rise as bond prices fall. On the other hand, a significantly weaker than expected reading should be good news for the bond market and mortgage rates, but this data can be quite volatile from month to month and is difficult to forecast. Therefore, a small variance from forecasts likely will have little impact on tomorrow’s bond trading or mortgage pricing.
October’s Consumer Confidence Index (CCI) will be released at 10:00 AM ET tomorrow. This Conference Board index gives us a measurement of consumer willingness to spend. It is expected to show an increase in confidence from last month’s 86.0 reading. That would mean that consumers felt better about their own financial and employment situations than last month, indicating they are more likely to make large purchases in the near future. That would be bad news for the bond market because consumer spending makes up a significant part of our economy. Current forecasts are showing a reading of 87.2. The lower the reading, the better the news it is for mortgage rates.
Overall, it appears Wednesday or Thursday could be the most active day for mortgage rates and today is the best candidate for calmest. The importance of tomorrow and Friday’s reports make them likely to be active day also, although I suspect the most movement in rates will take place the middle days due to the FOMC meeting and GDP report. With data or other events relevant to mortgage rates scheduled all four of the remaining days, it would be prudent to maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.