Updated on October 22, 2019 10:18:28 AM EDT
The National Association of Realtors gave us their Existing Home Sales report late this morning, announcing a 2.2% decline in September’s home resales. This was a larger decline than was expected, indicating weakness in the housing sector. That is good news for bonds and mortgage rates because a softening housing sector makes broader economic growth less likely, leaving bonds more attractive to investors.
Bonds were in positive ground before this morning’s housing data was posted. It appears that may be a result of Brexit-related news. There is a vote in Britain’s Parliament at 2:00 PM ET that is considered to be extremely important and will likely direct how the breakaway from the EU will proceed. Signs of a messy divorce in the near future should be favorable for mortgage rates here while a delay/extension or deals in place with EU members will likely have a negative impact on bonds and mortgage pricing. Look for a reaction to this during mid-afternoon trading today.
Tomorrow does not have any relevant economic data but does have the first of this week’s two Treasury auctions that have the potential to influence mortgage rates. 5-year Notes will be sold tomorrow followed by 7-year Notes Thursday. If these sales are met with a strong demand from investors, particularly the first, bond prices may rise during afternoon trading. This could lead to improvements in mortgage rates shortly after the results of the sales are posted at 1:00 PM ET each day. But a lackluster investor interest may create selling in the broader bond market and lead to slight upward revisions to mortgage rates.
©Mortgage Commentary 2019