Wednesday, October 23, 2019

Market Commentary

Updated on October 23, 2019 10:31:01 AM EDT

There is no relevant economic data being released today. The only mortgage rate sensitive event is the 5-year Treasury Note auction that is taking place. Results will be posted at 1:00 PM ET. If it is met with a strong demand from investors, bond prices may rise during afternoon trading. This could lead to a slight improvement in mortgage rates later today. On the other hand, a weak interest in the securities could cause an upward revision to rates. This process will be repeated tomorrow also when 7-year Notes are sold.

Tomorrow morning has two monthly economic reports for the markets to digest with one being much more important than the other. The major release is Durable Goods Orders for September at 8:30 AM ET. It gives us a measurement of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items, or products that are expected to last three or more years. Analysts are currently calling for a 1.1% decline in new orders for products such as airplanes, appliances and electronics. If we see a large increase in orders, mortgage rates will probably rise as bond prices fall. However, a larger decline should be good news for the bond market and mortgage rates. This data can be quite volatile from month to month and is difficult to forecast. Therefore, a small variance in orders either way likely will have little effect on tomorrow’s bond trading and mortgage pricing.

Septembers New Home Sales is the day’s second release, scheduled for 10:00 AM ET. This Commerce Department report covers the small percentage of home sales that yesterdays Existing Home Sales report didnt include. It is expected to show a small decline in sales of newly constructed homes, but I dont see this report having much of an impact on mortgage rates unless it shows a significant variance from forecasts.

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