Updated on October 9, 2024 10:06:58 AM EDT
Today’s only events that are expected to influence mortgage rates come during afternoon trading. First will be the results of today’s 10-year Treasury Note auction at 1:00 PM ET. It is this sale that may be contributing to this morning’s early bond weakness as traders often sell some holdings before, in preparation for the sale. Once it concludes, it is common for all or part of the pre-sale losses to be recovered. This is especially true if the auction is met with a strong demand from investors. If the sale does go well, meaning strong investor interest, it is quite possible to see an intraday improvement in rates later today. However, concerns about what tomorrow’s major inflation data may show could limit this afternoon’s reaction until that data is posted.
Next up is the release of the minutes from last month’s FOMC meeting at 2:00 PM ET. One key point bond traders are looking for is how many more rate cuts the Fed will make over the next few meetings, especially over the last two of the year. The general consensus is that they will make a quarter-point reduction at both of those meetings. If the minutes indicate discussion of a different schedule, we should see a strong reaction across the financial and mortgage markets. That said, the previous meeting was followed by revised economic predictions and a press conference with Fed Chair Powell. Therefore, the likelihood of seeing a significant surprise is relatively low.
Tomorrow brings us two economic reports that we will be watching and the 30-year Treasury Bond auction. The more important of the two is Septembers Consumer Price Index (CPI) at 8:30 AM ET. This report is extremely influential to the financial and mortgage markets because it tracks inflation at the consumer level of the economy. Analysts are predicting a 0.1% increase in the overall reading and a 0.2% rise in the more important core data that excludes more volatile food and energy costs. On an annual basis, the overall CPI is expected to have declined 0.2% to 2.3% while core data held at August’s 3.2% annual rate. Weaker readings that indicate inflation is easing would be very good news for bonds and mortgage rates.
Last week’s unemployment figures are also set for release early tomorrow morning. They are expected to show approximately 228,000 new claims for unemployment benefits were filed, up from the previous week’s 225,000 initial filings. The larger the number of new claims, the better the news for mortgage rates. However, unless the CPI shows now surprises whatsoever and the weekly update gives us a wide variance from forecasts, the CPI will be the driving force behind a change in mortgage rates tomorrow morning.
©Mortgage Commentary 2024