Wednesday’s bond market has opened in negative territory, erasing yesterday’s late gains. Stocks are mixed with the Dow down 12 points and the Nasdaq up 111 points. The bond market is currently down 12/32 (4.65%), which should keep this morning’s mortgage rates close to Tuesday’s early pricing. If you saw an intraday improvement in rates yesterday, you likely will see an increase of approximately the same size this morning.

This morning’s economic headlines came from the release of March’s Durable Goods Orders report at 8:30 AM ET. It revealed a 2.6% rise in new factory orders for big-ticket items such as airplanes, appliances and electronics. The headline number was a bit stronger than the 2.4% that was expected, but this data is known to be volatile. Therefore, the variance from forecasts is fairly insignificant. Also, a secondary reading that excludes transportation orders (airplanes) came in slightly below predictions (up 0.2% compared to 0.3%). Furthermore, February’s increases for these numbers were revised much lower than previously announced.

There is also a 5-year Treasury Note auction taking place today. Results of the sale will be announced at 1:00 PM ET. If the results show a strong demand for the securities, we may see afternoon gains in bonds that lead to a slight improvement in mortgage rates during afternoon trading. However, if the benchmarks point towards a lackluster demand, in other words a poor auction, it is possible that rates will revise modestly higher later today. This scenario will be repeated tomorrow when 7-year Notes are sold.

Tomorrow has two early morning releases scheduled, but one is much more important to the markets than the other. The report the markets will be focused on tomorrow is the initial 1st Quarter Gross Domestic Product (GDP) reading at 8:30 AM ET. GDP is the sum of all products and services produced in the U.S. and is considered to be the best measure of economic growth or contraction. Market participants are expecting it to reveal the economy grew at an annual rate of 2.4% during the first three months of this year, slowing from the 3.4% rate of the end of last year. A noticeably smaller growth rate would be considered very good news for mortgage rates.

We will also get last week’s unemployment figures at the same time as the GDP release. Forecasts have them showing 215,000 new claims for benefits were made, up from the previous week’s 212,000. Rising claims are a sign the employment sector is weakening, so the larger the number, the better the news for bonds and mortgage rates. That said, the GDP will have a much stronger influence on tomorrow’s trading than this weekly update will.