Wednesday’s bond market has opened in negative territory with little to drive trading this morning. Stocks are showing early gains with the Dow up 238 points and the Nasdaq up 171 points. The bond market is currently down 7/32 (3.59%), which should cause a slight increase in this morning’s mortgage rates.
Yesterday’s 5-year Treasury Note auction drew a fairly strong demand from investors. Bonds reacted favorably to the results after they were posted at 1:00 PM ET, but it wasn’t enough of a move to cause an intraday improvement in rates for most lenders. What it does do though, is allow us to be optimistic about today’s 7-year Note sale. If investor interest in the securities is as strong as it was yesterday, we could see bonds improve and mortgage rates revise slightly lower after results are announced at 1:00 PM ET.
There is no relevant economic data set for release today that is expected to affect trading.
Tomorrow has the second revision to the 4th Quarter GDP and last week’s unemployment figures scheduled, both at 8:30 AM ET. The Gross Domestic Product is the total of all goods and services produced in the U.S. and is the benchmark measurement of economic activity. It is expected to show that the economy grew at an annual pace of 2.7% last quarter, unchanged from the previous estimate that was announced last month. Analysts are now more concerned with next month's preliminary reading of the 1st quarter than data from three to six months ago. Accordingly, unless we see a significant revision, this report probably will have little influence on tomorrow’s mortgage rates.
Last week’s unemployment update is expected to show 196,000 new claims for unemployment benefits were filed, up from the previous week’s 191,000. Rising claims is a sign of employment sector weakness. Therefore, the higher the number of new filings, the better the news it is for mortgage pricing. That said, since this just a weekly snapshot, it will take a wide variance from forecasts for the report to have a noticeable impact on rates.