VMG Weekly Rate Tracker – 12-09-2014

Tuesday’s bond market has opened in positive territory due to strong selling in stocks. The major stock indexes are posting sizable losses with the Dow down 146 points and the Nasdaq down 24 points. The bond market is currently up 15/32 (2.20%), which should improve this morning’s mortgage rates by approximately .250 of a discount point is comparing to yesterday’s morning pricing.

Today also has nothing of relevance scheduled for release, leaving bond direction to be mostly dictated by stock trading. That is a good thing this morning as stocks are reacting negatively to concerns about global economic growth. As stocks fall, bonds become more appealing to investors for their safety. However, if the safe-haven shift is short-lived, the bond gains that came with it usually unwinds, causing rates to move higher quickly.

Tomorrow morning doesn’t have anything for us to address either. But it does have the first of this week’s two Treasury auctions that have a decent chance of affecting mortgage rates. 10-year Treasury Notes will be auctioned tomorrow while 30-year Bonds will be sold Thursday. Results of the sales will be posted at 1:00 PM ET each day. If they are met with a strong demand from investors, particularly international buyers, we should see strength in the broader bond market and improvements to mortgage pricing during afternoon hours those days. On the other hand, a weak interest in the auctions could lead to upward revisions to mortgage rates.

There still is plenty to drive bonds and mortgage rates this week. There are only three monthly economic reports scheduled, but two of them (Retail Sales and PPI) are considered to be highly important. I suspect we will see an active couple days at the end of the week in terms of mortgage rate movement.