Tuesday’s bond market has opened in negative territory despite a lackluster open in stocks and slightly weaker than expected economic news. The Dow is currently up 23 points while the Nasdaq has gained 10 points. The bond market us currently down 15/32, which will likely push this morning’s mortgage rates higher by approximately .250 of a discountpoint over yesterday’s morning pricing.
Today’s only relevant economic data came from the National Association of realtors, who reported that home resales rose 3.4% last month, falling just a bit short of expectations. Still, it was a sizable increase, indicating strength in the housing sector. That makes the data negative for bonds and mortgage rates because a strengthening housing sector makes a broader economic recovery more likely.
Tomorrow has another housing sector report scheduled with the release of April’s New Home Sales data at 10:00 AM ET. It is the sister report of today’s Existing Home Sales, but tracks a much smaller portion of housing sales than today’s report does. Actually, it is the least important release of the week and probably will not have much of an impact onmortgage pricing unless it shows a significant surprise. It is expected to show gains in sales from March’s level, meaning the new home portion of the housing sector also strengthened last month.
We also have the 5-year Treasury Note sale tomorrow that can influence bond trading and mortgage pricing. A strong demand from investors could help fuel buying in the broader bond market, leading to improvements in mortgage rates tomorrow. However, a weak demand could have the opposite effect on bonds and mortgage rates. Results of the sale will be posted at 1:00 PM ET, tomorrow, so any reaction will come during afternoon hours.
