Monday’s bond market has opened in positive territory in reaction to the overseas news about Cyprus from this weekend. As expected, stocks are reacting negatively to the same news, pushing the Dow down 41 points and the Nasdaq down 17 points. Both indexes are well off earlier lows, but are still in negative ground. The bond market is currently up 14/32, pushing the yield on the benchmark 10-year Treasury Note back below 2.00% during early trading. That should create an improvement in this morning’s mortgage rates from Friday’s morning pricing.
There is no economic data being released today that is of relevance to the bond or mortgage markets. The rest of the week brings us the release of four monthly reports for the bond market to digest, but none of them are considered to be highly important. We also have some key Fed FOMC events the middle part of the week.
The economic news begins early tomorrow morning when February's Housing Starts will be posted. This report tracks construction starts of new housing. It doesn't usually cause much movement in mortgage rates and is considered one of the less important reports we see each month. It is expected to show an increase in housing starts, indicating growth in the housing sector. Good news for the bond market and mortgage rates would be a sizable decline in new starts, but unless we see a large variance from forecasts the data likely will not lead to a noticeable move in mortgage pricing.
Overall, I am considering Wednesday as the key day of the week with three Fed events scheduled (FOMC adjournment, Fed economic predictions and Chairman Bernanke’s press conference). The least important day will probably be Friday, however, we could see movement in rates any day. It appears that the recent stock rally could be losing steam and if that is true we may see funds shift back into bonds in the near future that could lead to lower mortgage rates.
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