Mortgage Market Update

Monday’s bond market has opened in positive territory to start the last week of the year in the right direction. Stocks are showing early gains of 88 points in the Dow and 94 points in the Nasdaq. The bond market is currently up 3/32 (1.48%), which should improve this morning’s mortgage rates slightly if compared to Thursday’s early pricing. The financial and mortgage markets were closed Friday in recognition of the Christmas Day holiday.

Today has nothing of importance scheduled. The rest of the week doesn't have any monthly or quarterly economic reports for the markets to be concerned with. We do have a couple of Treasury auctions and the weekly unemployment update to watch, but they are not expected to bring a strong reaction in the markets.

With nothing scheduled that is expected to draw much attention, with exception to year positioning, we should see another week of thin trading. In other words, don’t be too concerned about any upward moves in rates this week, nor excited if we get improvements. After the New Year’s holiday is behind us we can expect to see regular trading volumes that carry some credibility.

Tomorrow has the 5-year Treasury Note auction taking place, followed by 7-year Notes Wednesday. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions in mortgage rates. On the other hand, strong investor demand usually makes bonds more attractive to investors and brings funds into the bond market. Results of the sales will be posted at 1:00 PM ET each day. If there is a reaction to them, it will be minor and come during early afternoon trading tomorrow and/or Wednesday.