Monday’s bond market has opened in negative territory even though today’s only relevant economic data showed us favorable results. The stock markets are starting the week with solid gains of 121 points in the Dow and 34 points in the Nasdaq. The bond market is currently down 13/32 (2.18%), but due to some gains late Friday we should see only a slight increase in this morning’s mortgage rates.
The National Association of Realtors gave us August's Existing Home Sales report at 10:00 AM ET this morning. It showed that home resales fell 4.8% last month. That was much weaker than the 1.6% decline that was expected and indicates a softening housing sector. Since bonds tend to thrive in weaker economic conditions, we can consider this data favorable for mortgage rates. Unfortunately, bond traders aren’t too impressed with the news.
There are four remaining relevant monthly or quarterly reports set for this week, in addition to two potentially influential Treasury auctions. Most of the reports are considered to be of moderate to fairly high importance to the markets, so they do have the potential to affect mortgage rates although I am expecting to see less volatility in the financial and mortgage markets than we saw last week. We will be watching stocks and news from overseas to heavily impact bond trading and mortgage rates this week also.
There is nothing of importance scheduled for tomorrow. The next item on our calendar is the 5-year Treasury Note auction Wednesday afternoon. There are several reports set for release Thursday and Friday though, so don’t be surprised to see the most movement in rates the latter part of the week.
Overall, I don't see an obvious choice for key day of the week but Thursday has the single most important report. So, let's label it as likely to be most active although Friday does have two reports scheduled also. The least important day looks to be tomorrow with nothing of relevance scheduled. I suspect we will see changes in mortgage rates multiple days this week, but in small increments rather than sizable moves.