Updated on May 11, 2021 10:07:06 AM EDT
There is nothing of importance scheduled for release today other than a handful of Fed member speaking engagements. This morning’s bond selling has brought the benchmark 10-year Treasury Note yield back to a key level. If 1.62% acts as a ceiling, meaning it fails to break above that threshold, we should see rates hold at this morning’s levels and possibly move lower soon. On the other hand, if it closes above 1.62%, we may see an upward trend in rates over the next few days.
Aprils Consumer Price Index (CPI) will start this week’s activities at 8:30 AM ET tomorrow. This report measures inflationary pressures at the consumer level of the economy and its results are watched closely because rising inflation makes long-term securities, such as mortgage-related bonds, less attractive to investors. With inflation such a hot topic in the markets currently, this type of report will have an even heavier impact on rates than usual. The overall reading is expected to rise 0.2% while the more important core data is predicted to rise 0.3%. Favorable news for bonds and mortgage rates will be smaller increases.
The first of this week’s two relevant Treasury auctions will take place tomorrow also. 10-year Notes will be auctioned tomorrow while 30-year Bonds will be sold Thursday. Results of each sale will be posted at 1:00 PM ET. If they are met with a strong demand from investors, we could see bond prices rise enough during afternoon trading to cause downward revisions to mortgage rates. However, lackluster bidding in the sales, meaning longer-term securities are losing their appeal, could lead to higher mortgage pricing.
©Mortgage Commentary 2021