Mortgage and Interest Rate Update

Wednesday’s bond market has opened in negative territory as investors prepare for today’s auction. The stock markets are in positive ground with the Dow up 28 points and the Nasdaq up 6 points. The bond market is currently down 8/32, but we likely will see little change in this morning’s mortgage rates due to strength late yesterday.

Today’s only relevant economic news will come from the Federal Reserve this afternoon when they post their Beige Book report. This report, which is named simply after the color of its cover, details economic conditions throughout the U.S. by region. Since the Fed relies heavily on it during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any surprises. It will be released at 2:00 PM ET, so any reaction to its results will come later today.

Also on tap today is the 10-year Treasury Note auction. If there is a strong demand for them during the sale, we should see the bond market move higher during afternoon trading. But a lackluster interest from buyers, particularly international investors, would indicate a waning appetite for longer-term U.S. securities and lead to broader bond selling. The selling in bonds would result in upward revisions to mortgage rates. We will repeat this scenario tomorrow for the 30-year Bond auction.

Tomorrow morning brings us the release of December’s Retail Sales data. This is one of the more important reports we see each month it measures consumer spending by tracking sales at retail establishments in the U.S. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely. Current forecasts are calling for an increase in sales of approximately 0.5%. A smaller than expected increase would be good news for bonds and mortgage rates tomorrow.

The Labor Department will post last week’s unemployment figures tomorrow morning also. They are expected to show that 436,000 new claims for benefits were filed last week, but I doubt this data will cause much movement in mortgage rates. It tracks only a week’s worth of new claims, so its impact on the markets is usually minimal.

Source: Ken Mason, Mortgage California