Wednesday’s bond market has opened in negative territory with nothing of
importance being released this morning to drive trading. The stock markets
are also contributing to early bond weakness with minor gains of 26 points
in the Dow and 3 points in the Nasdaq. The bond market is currently down
6/32, but due to strength late yesterday we will likely see little change
in this morning’s mortgage rates if comparing to Tuesday’s morning pricing.
Today’s 10-year Treasury Note auction could affect this afternoon’s bond
trading and mortgage rates. Results of the sale will be posted at 1:00 PM
ET, so any reaction will come during afternoon trading. If investor demand
was high for the securities, we may see bonds rally during afternoon
trading and mortgage rates move lower. However, if the sale is met with a
weak demand from investors, the broader bond market will likely soften,
leading to an upward revision in this afternoon’s mortgage pricing.
The first monthly economic data of the week is one of the more important
ones we see each month. The Commerce Department will post May’s Retail
Sales data at 8:30 AM ET tomorrow. This report gives us a very important
measurement of consumer spending, which is highly relevant to the bond
market because consumer spending makes up over two-thirds of the U.S.
economy. Analysts are expecting to see that retail-level sales rose 0.3%
last month. A decline in sales, signaling a slowing economy, would be
negative for stocks, good news for the bond market and should lead to lower
mortgage rates tomorrow morning. On the other hand, a stronger level of
sales will likely equate to an increase in rates.
Also early tomorrow morning will be the Labor Department’s weekly
unemployment update. They are expected to announce that 345,000 new claims
for unemployment benefits were filed last week. This would be a slight
change from the previous week’s total, meaning the employment sector didn’t
really weaken or strengthen last week. Ideally, we would like to see an
increase in initial claims because it would hint at sector weakness. Since
the bond market and mortgage rates tend to do better in weaker economic
conditions, the larger the increase in claims, the better the news it is.
Although, it is worth noting that the monthly Retail Sales data is much
more important and influential on the markets than this weekly update.
Tomorrow also brings us the 30-year Bond auction. It will have the same
schedule as today’s 10-year Note sale does, with results posted at 1:00 PM
ET. Today’s sale will help us gauge investor demand in longer-term
securities and usually has a more noticeable impact on mortgage rates, but
the 30-year Bond sale can also cause some movement if there was a
particularly strong or weak investor interest.
If I were considering financing/refinancing a home, I would.... Lock if my
closing was taking place within 7 days... Lock if my closing was taking
place between 8 and 20 days... Float if my closing was taking place between
21 and 60 days... Float if my closing was taking place over 60 days from
now...
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