Wednesday’s bond market has opened down slightly as traders prepare for this afternoon’s events. The stock markets are mixed but fairly calm with the Dow up 13 points and the Nasdaq down 20 points. The bond market is currently down 3/32 (2.31%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point over yesterday’s morning rates.
There is nothing of importance set for release this morning, but there are two events this afternoon that are worthy of our attention. The first isn’t highly important and at best may lead to a minor change in rates. That is the 5-year Treasury Note auction results at 1:00 PM ET. If it shows that the sale was met with a strong demand from investors, bond prices may rise early afternoon. This could lead to improvements to mortgage rates, but I suspect most lenders will wait for the second event of the afternoon before making much of a change.
The two-day FOMC meeting will adjourn at 2:00 PM ET today. There is little chance the Fed will change key short-term interest rates during this meeting, although it is expected to bring an end to their bond-buying program that was initiated to help stimulate economic growth. Market participants will be looking at the post-meeting statement for any indication of a change in Fed sentiment or possible further hints on when they will make their first rate increase. This could be a market mover if the statement reveals a significant change in verbiage.
We will update this report shortly after the markets have an opportunity to react to the FOMC results. There is important economic data set for release tomorrow (GDP), but it will be addressed in the afternoon revision.