Tuesday’s bond market has opened in negative territory with stocks in positive ground and no data to drive trading. The Dow is currently up 78 points while the Nasdaq is up 1 point. The bond market is currently down 5/32 (2.07%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point.
Today has nothing of relevance set for release or taking place that is expected to influence mortgage rates. We can expect stocks to be the cause of an intra-day change to rates. If the major indexes extend this morning’s gains, I would not be surprised to see pressure in bonds that leads to a small upward revision to mortgage pricing later today. On the other hand, if this morning’s early stock gains dwindle, bonds could benefit, causing an improvement sometime this afternoon.
Tomorrow has the first relevant event of the week with number one of this week’s two important Treasury auctions. The sale of 10-year Notes will be held tomorrow while 30-year Bonds will be sold Thursday. We often see some weakness in bonds ahead of the sales as the firms participating prepare for them. However, as long as the auctions are met with decent demand from investors, the firms usually buy them back. This tends to help recover any presale losses. But, if the sales are met with a lackluster interest from investors- particularly international buyers, the bond market may move lower after the results are posted and mortgage rates may move higher. Those results will be announced at 1:00 PM each sale day, so any reaction will come during early afternoon trading tomorrow or Thursday.