Monday’s bond market has opened in negative territory, erasing gains from late Friday. The stock markets are starting the new week with minor gains of 41 points in the Dow and 3 points in the Nasdaq. The bond market is currently down 14/32 (2.16%), but due to strength late Friday we should see this morning’s mortgage rates be very close to Friday’s morning pricing.
There is nothing of importance set for release today or tomorrow. The rest of the week has five economic reports that are relevant to the bond market and mortgage pricing, some of which is considered to be highly important to the markets. In addition to the data, there are two Treasury auctions that we need to watch mid-week.
The Treasury auctions are the first things we are expecting to affect mortgage rates. Wednesday’s 10 year Note sale and Thursday’s 30-year Bonds auction are the two that are likely to influence rates. Wednesday’s sale is the more important of the two. If the sales are met with a strong demand from investors, we should see the bond market move higher during afternoon trading the days of the auctions. But a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader bond selling. The selling in bonds would result in upward revisions to mortgage rates. Results will be posted at 1:00 PM ET each day, so any reaction will come during early afternoon trading.
The first economic report of the week will be the Federal Reserve's Beige Book Wednesday at 2:00 PM ET. This report is named simply after the color of its cover and details economic conditions throughout the U.S. by Fed region. Since the Fed relies heavily on it during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any surprises, particularly regarding inflation, unemployment or future hiring. Any reaction to the report though will come during afternoon trading.
Overall, I see Friday as the key day of the week with four pieces of economic data scheduled but Wednesday afternoon is also worthy of plenty of attention. On paper, we can expect to see the most movement in rates Friday, but the truth is that there is a decent chance of seeing noticeable changes in mortgage rates multiple days this week.