Wednesday’s bond market has opened in negative territory as traders await this afternoon’s Fed events. Stocks are mixed again with the Dow down 30 points and the Nasdaq up 115 points. The bond market is currently down 4/32 (4.26%), which should cause a slight increase in this morning’s mortgage rates if compared to Tuesday’s early pricing.

Yesterday’s 5-year Treasury Note auction was uneventful for the most part. The benchmarks we use to gauge investor demand pointed to an average level of interest in the securities compared to other recent sales. We saw a modest negative reaction following the 1:00 PM ET results announcement, but it wasn’t enough of a move to affect mortgage rates. Most lenders are likely reflecting that move in this morning’s pricing rather than revising rates late yesterday.

There is no relevant economic data set for release today. All eyes are on what the Fed does during this week’s FOMC meeting that will adjourn at 2:00 PM ET. This is the first meeting of the year and the first with the new rotation of voting members. While there are nineteen people that participate in the FOMC meetings, only eleven have voting rights to decide what action the Fed takes or does not take. The permanent makeup of the voting members includes seven Fed Governors, including the Chairman and the New York Fed Bank President. The remaining four spots come from an annual rotation of other Fed regional bank presidents. Getting voting rights this year are the Fed Presidents of Cleveland, Dallas, Minneapolis and Philadelphia. This new group of voting members tends to be more concerned about inflation, meaning they lean towards not lowering key rates, than the outgoing group. This is relevant since the Fed has been quite divided in its recent votes.

It is widely expected that the Fed will leave key short-term interest rates alone today as they wait to see which direction inflation is heading after the three consecutive .250 point cuts they made late last year. This is especially true considering the new makeup of voting FOMC members. Therefore, traders will be looking at the post-meeting statement for hints about when they will make their next move. An indication of another rate cut coming sooner than later should draw a positive reaction in the bond market and lead to lower mortgage rates later today. However, if the markets feel we may not get another cut in the near future, we could see bond weakness and an intraday increase to rates this afternoon.

The post-meeting statement will also be released at 2:00 PM ET, followed by a press conference with Chairman Powell at 2:30 PM ET. This meeting does not include revised economic projections or the dot-plot used for predicting where short-term rates will be in the future.

Tomorrow morning has a couple of economic reports set for release that are considered to be moderately important, at best. They include the weekly unemployment update, revised worker productivity numbers and November’s Factory Orders report. They will be addressed in this afternoon’s update that will be posted shortly after the markets have an opportunity to react to today’s FOMC events.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.