Monday’s bond market has opened in positive territory as stocks kick the week off in negative ground. The Dow is currently down 96 point while the Nasdaq has lost 15 points. The bond market is currently up 12/32, but due to fairly significant weakness late Friday, we may not see much of an improvement in this morning’s mortgage rates if comparing to Friday’s morning pricing.
The Commerce Department gave us today’s only relevant economic data with the release of December's Factory Orders data late this morning. They announced that new orders for durable and non-durable goods rose 1.8% in December when analysts were expecting to see a 2.4% increase. That means the manufacturing sector did strengthen at the end of the year, but at a slower pace than many had thought. Therefore, we can consider the data fairly good news for the bond market and mortgage pricing.
Tomorrow has nothing of relevance scheduled for release. The rest of the week has only two more pieces of monthly economic data scheduled and neither of them is considered to be highly important to mortgage rates. While that would normally not be something to look forward to, it should be welcomed news following the beating mortgage rates have taken over the past couple weeks, especially if the major stock indexes continue to lose ground.
Overall, I am expecting a much calmer week in the mortgage market than we have seen the past couple. With little economic data to drive bond trading, look for the stock markets to play a major role in bond movement and mortgage rate changes. If the major stock indexes extend their recent rally that closed the Dow above 14,000 Friday for the first time since Oct 2007 (but has been lost this morning), we could see bond prices fall and their yields move further above 2.00%. Since mortgage rates tend to follow bond yields, this would be bad news for mortgage shoppers. However, if stocks extend this morning’s selling, we should see bond prices continue to rise and mortgage rates move lower this week.
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