Todays Commentary

Updated on August 21, 2018 10:35:38 AM EDT
Tuesday’s bond market has opened in negative territory with stocks showing early strength. The Dow is currently up 77 points while the Nasdaq has gained 44 points. The bond market is currently down 8/32 (2.84%), but slight strength late yesterday should keep this morning’s mortgage rates at yesterday’s early levels.

Today also has nothing of relevance taking place. If we see an intraday revision to mortgage rates it most likely will be a result of a move in stocks. If the major stock indexes a extend their early gains, we could see more pressure in bonds possibly lead to a slight increase in rates. On the other hand, if stocks move noticeably lower, we may see rates improve later today.

There are two events tomorrow that we will be watching. The first is July's Existing Home Sales report at 10:00 AM ET. The National Association of Realtors will release this report, giving us a measurement of housing sector strength. It covers a high percentage of all home sales in the U.S., but usually does not have a major influence on bond trading and mortgage rates unless it varies greatly from analysts' forecasts. It is expected to show a slight rise from June's sales, meaning the housing sector strengthened a little last month. This would generally be bad news for the bond market and mortgage rates because a strengthening housing sector makes broader economic growth more likely. But unless the increase is much larger than current forecasts, the report will likely have a slight impact on mortgage pricing at best.

A second release will come during afternoon hours. That is when we will get the minutes from the last FOMC meeting. There is a pretty good possibility of the markets reacting to them following their release. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation concerns in the economy, economic growth and the Fed's plans for raising short-term interest rates. Since the minutes will be released at 2:00 PM ET, if there is a market reaction to them it will be evident during mid-afternoon trading. This is one of those events that can cause significant movement in rates after its release or be a non-factor. Therefore, be prepared for a move, but not surprised if the impact on rates is minimal.


 ©Mortgage Commentary 2018
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