Tuesday’s bond market has opened in positive territory despite the lack of relevant economic data. The major stock indexes are showing minor losses, pushing the Dow down 34 points and the Nasdaq lower by 2 points. The bond market is currently up 11/32 (2.14%), which should improve this morning’s mortgage rates higher by approximately .125 of a discount point.
What is driving this morning’s bond rally is news from China that indicates they may be buying more U.S. securities in the immediate future. It was believed China, the largest holder of U.S. debt, was selling holdings. So, the news of new buying should help keep bond yields lower in the near future. Since mortgage rates tend to track bond yields, we are seeing a positive reaction in this morning’s trading and mortgage pricing.
The rest of the week has little scheduled for release that may affect mortgage rates. There are no monthly or quarterly economic reports scheduled the rest of the week, leaving outside factors to be the biggest influence on the bond and mortgage markets the next few days.
One key event will be former FBI Director James Comey’s expected Senate testimony Thursday. If he does testify, we can expect the markets to have some type of reaction to the proceedings. It is more likely that we will hear things that will be bond favorable, but how strong of a reaction they will have remains to be seen.
Despite the light week, it is still recommended to maintain contact with your mortgage professional if still floating an interest rate and closing in the near future. As we saw this morning, the unexpected can happen at any time and have a noticeable impact on rates.