This holiday-shortened week brings us the release of only one monthly economic report for the markets to digest along with two relevant Treasury auctions. It is worth noting though that the sole economic report is non-governmental and comes on a day that the bond market will be closed. Most banks and the bond market will be closed Friday in observance of the Veteran's Day holiday, but the stock markets will be open for business.
There is nothing of importance scheduled for tomorrow, so we can expect bonds and mortgage rates to be driven by stock movement. Friday's Employment report-fueled bond gains could extend into tomorrow's trading, possibly helping rates to start the week on a positive note. Tuesday’s election results could influence the financial and mortgage markets early Wednesday, although I don’t think anyone really knows what to expect regardless who wins.
The first non-election events of the week will be the two important Treasury auctions Wednesday and Thursday. 10-year Treasury Notes will be sold Wednesday while 30-year Bonds go Thursday, giving us an indication of demand for long-term securities. If the sales are met with a strong demand from investors, we should see the bond market move higher during afternoon trading Wednesday and/or Thursday. 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 probably result in upward revisions to mortgage rates. Wednesday’s 10-year Note auction usually has the bigger impact on rates than 30-year Bonds.
We will get the sole piece of relevant economic data late Friday morning when November's preliminary reading of the University of Michigan's Index of Consumer Sentiment is posted. This index measures consumer confidence, which gives us an indication of consumer willingness to spend. It is expected to show a reading of 87.5, up a little from October's final reading of 87.2. That would be considered negative news for bonds because rising sentiment means consumers are more optimistic about their own financial situations and are more likely to make large purchases in the near future. And with consumer spending so important, any related data is watched closely. The lower the reading, the better the news it is for mortgage shoppers.
Overall, I am not expecting to see an overly active week for mortgage rates, although we should see movement more than one day. Wednesday is the best candidate for most important day due to Tuesday’s late election results and then the afternoon Treasury auction.