Mortgage Market Update

Monday’s bond market has opened flat as investors take a breather after Friday’s volatility. The stock markets are showing relatively minor losses with the Dow down 36 points and the Nasdaq down 4 points. The bond market is currently unchanged from Friday’s close, but that is a little higher than Friday’s morning level when mortgage rates were posted. Bonds weakened a little during afternoon trading, leading to some lenders to make upward revisions to their rate sheets late Friday.

There is nothing of relevance to mortgage rates scheduled for today. The rest of the week brings us the release of three relevant economic reports, in addition to a couple of Treasury auctions and the minutes from the last FOMC meeting. Corporate earnings season also kicks off today with Alcoa posting this afternoon. That report is usually a focal point because it is the first Dow component to report earnings each quarter. There are other companies scheduled to post this week that will also influence the markets and broader economic theories, but AA is the first of the key earnings. Generally speaking, weaker than expected reports hurt stock prices and make bonds more attractive to investors.

Tomorrow also has nothing of importance scheduled for release. The first events of the week will come Wednesday afternoon when we get the release of the minutes from the last FOMC meeting and have one of the Treasury auctions worth watching. Market participants will be looking at the minutes closely as they give us insight to the Fed's current thought process and individual Fed member opinions. The 10-year Treasury Note auction helps gauge investor demand for longer-term securities, including mortgage-related bonds.

Overall, look for the most movement in rates the latter part of the week, particularly Friday with all three of this week’s economic reports coming that day. The PPI and Retail Sales reports are considered highly important monthly reports, both of which will be released early Friday. Also look for the stock markets to influence bond trading and mortgage rates a good part of the week as traders react to the earnings news, but I believe we will see the most movement in rates the latter part.