Updated on February 22, 2012 11:41:35 AM EST EST
OpenClose Mortgage Software

Stocks are showing relatively minor losses with the Dow down 40 points and the Nasdaq down 15 points. But what is more important is that the Dow was unable to close about 13,000 yesterday and at the moment is moving further away from that benchmark. The bond market is currently up 8/32, but due to weakness late yesterday we will still likely see a slight increase in this morning’s mortgage rates if comparing to yesterday’s morning pricing.

Today’s only economic news came from the National Association of Realtors, who reported that home resales rose 4.3% last month. That was a much bigger increase than was expected and appears to give the impression that the housing sector is strong. However, a sizable downward revision to December’s sales figures brought January’s sales to a level that was below December’s previous estimate. In other words, the new month to month increase is sizable, but we are now still weaker in sales than we thought we were last month. Therefore, we can considered this data neutral for the bond market and mortgage rates.

Also today is the first of this week’s semi-relevant Treasury auctions. Today’s sale has 5-year Notes being sold while tomorrow will be 7-year Notes. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions to mortgage rates. However, strong sales usually make bonds more attractive to investors and bring more funds into bonds. The buying of bonds that follows usually translates into lower mortgage rates. Results of the auctions will be posted at 1:00 PM ET each sale day, so any reaction will come during afternoon hours.

Tomorrow’s only economic news is the weekly unemployment update from the Labor Department at 8:30 AM ET. They are expected to announce that the number of new claims for unemployment benefits rose from 348,000 to 355,000 last week. This would be good news for the bond market as it would indicate a weakening employment sector. However, since this report tracks only a single week’s worth of new claims, its impact on trading and mortgage pricing is usually fairly minimal unless it shows a surprisingly large increase or decline. The higher the number of new claims, the better the news for bonds and mortgage rates.

©Mortgage Commentary 2012 Please E-mail us your opinion of this report