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Tuesday's bond market has opened in negative territory despite a mixed
open in stocks and a lack of economic data to drive trading. The Dow is
showing a gain of 11 points while the Nasdaq is currently down 8 points.
The bond market is currently down 8/32, but due to some strength in trading
late yesterday we will likely see little change in this morning's mortgage
rates, they are still available in the 4’s for 30 year loans.
There is again no relevant economic data scheduled for release today,
but the market is showing some reaction to comments made by Fed Chairman
Bernanke late yesterday. In a speech last night he said that the economy is
gaining some momentum but that employment concerns remain high. However, he
did not indicate when he thinks the Fed will begin to raise key short-term
interest rates. His words were basically positive for stocks with a
somewhat negative tone for bonds. This is also influencing trading this
morning, but to a small degree.
Chairman Bernanke will speak publicly tomorrow to the House Budget
Committee on current economic conditions and budget-related matters. His
words could again influence the markets enough to affect mortgage rates, but
unless he says something surprising, I suspect they will have a minimal
impact on tomorrow's mortgage rates.
Tomorrow afternoon brings us the release of the Fed's Beige Book. This
data details economic conditions throughout the U.S. by region. It is relied
upon heavily by the Federal Reserve to determine monetary policy during
their FOMC meetings. If it shows much stronger economic activity than its
last release, we could see mortgage rates rise tomorrow after the 2:00 PM ET
release. Particularly so if it indicates inflation is growing.
We also have to watch for the results of tomorrow's 10-year Treasury
Note auction. Results the sale will be posted at 1:00 PM ET. If investor
demand was high for the Notes, we may see bonds rally during afternoon
trading, however, weak demand could lead to selling and an increase to
mortgage rates.
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