Mortgage Market Update

Monday’s bond market has opened flat with little to drive trading this morning. The stock markets are showing minor losses of 15 points in the Dow and 5 points in the Nasdaq. Those are nothing to be excited or concerned about. The bond market is currently unchanged from Friday’s close, but we will still likely see an increase in this morning’s mortgage rates of approximately .125 of a discount point due to weakness Friday afternoon. 

There is nothing of relevance scheduled for release today, but the rest of the week brings us the release of five relevant economic reports along with two Treasury auctions that could influence mortgage rates. A couple of the economic reports are considered highly important, so we could see a fair amount of movement in rates again this week. All of the data is scheduled for release over the last three days, therefore, we should see the most movement in rates the latter part of the week.

The first thing on the calendar will come from the Commerce Department early Wednesday morning when they post February's Retail Sales data. This data is extremely important to the financial markets because it measures consumer spending. Since consumer spending makes up over two-thirds of the U.S. economy, data that is related usually has a big impact on the markets. This month's report is expected to show an increase in sales of approximately 0.5%. If it reveals a larger than expected increase, the bond market will likely fall and mortgage rates will move higher as it would indicate a stronger level of economic growth than many had thought. If it reveals a much smaller than expected increase, I expect to see bond prices rise and mortgage rates improve Wednesday morning.

Overall, I would label Friday as the most important day of the week, but Wednesday is also likely to be active for mortgage rates. Stocks rallied last week, helping to drive bond yields and mortgage rates higher. The yield on the benchmark 10-year Treasury Note is still above 2.00%. This is troublesome for mortgage rates if it remains above that threshold as it could become a floor of support. Since mortgage rates follow bond yields, it would mean rates are more likely to rise than move much lower in the immediate future.