Friday’s bond market has opened in negative territory as yesterday’s rally failed to carry into this morning’s trading. A big part of that is because stocks are in positive territory after yesterday’s sell-off pushed the Dow lower by 419 points. The stock market markets are showing some minor strength this morning with the Dow up 24 points and the Nasdaq up 8 points. These are well off earlier highs, so we should watch to make sure momentum isn’t lost during afternoon hours that may cause more losses in the major indexes. The bond market is currently down 9/32, which will likely push this morning’s mortgage rates higher by approximately .125 – .250 of a discount point.
There is nothing of relevance being released today, so any significant movement in bond prices and mortgage rates would likely come from a large swing in the major stock indexes. If they extend their current gains by a lot, or reverse coarse to post a sizable loss, we could see mortgage rates revise accordingly later today.
As we saw with yesterday’s bond rally, the mortgage market was not too impressed despite the significant stock selling. It appeared that yesterday’s gains were not expected to hold, which at least at the moment appears to be fairly accurate. This is fairly important because it indicates that mortgage bond traders don’t expect bond prices to remain near current levels. We should take that as another cautionary sign towards near-term mortgage pricing.
Next week brings us the release of several moderate or fairly important economic reports along with two semi-relevant Treasury auctions and a speaking engagement from Fed Chairman Bernanke. None of the economic reports are considered to be highly important, but a couple of them do carry enough significance to influence mortgage rates if they show surprising results.