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Daily Market Update

DAILY MARKET UPDATE

Updated on April 16, 2024 10:05:42 AM EDT
Tuesday’s bond market has opened in negative territory again as the recent upward momentum in yields continues. Stocks are showing early gains of 115 points in the Dow and 10 points in the Nasdaq. The bond market is currently down 18/32 (4.67%), which should push this morning’s mortgage rates higher by approximately .125 - .250 of a discount point.

The first of this morning’s two economic releases was March's Housing Starts report at 8:30 AM ET. It indicated a big slowdown in new home groundbreakings last month, hinting at housing sector weakness. The 14.7% decline was a much larger drop than expected and the biggest since February of 2015 if pandemic months are excluded. While this is a sign of softer economic activity, this report doesn’t carry a strong importance in the markets. This has prevented a positive reaction in this morning’s bond trading.

March's Industrial Production data was also posted this morning. The 9:15 AM ET release showed a 0.4% rise in output at U.S. factories, mines and utilities. This is a sign of stronger manufacturing activity, but matched forecasts. With a lack of a surprise in the report and the fact this is just moderately important data, we haven’t seen bonds react to this news either.

Tomorrow only has a couple of afternoon events that are expected to influence mortgage rates. There is no morning economic data that we are concerned about. One is the 20-year Treasury Bond auction that is taking place tomorrow. These types of sales don't directly affect mortgage rates, although they can impact broader bond trading sentiment that has the potential to indirectly move rates slightly. A strong demand from investors could lead to bond gains and a minor improvement in mortgage pricing. On the other hand, a weak interest in the securities may cause some pressure in bonds during afternoon trading and potentially, mortgage rates. Results will be announced at 1:00 PM ET, making this an early afternoon event for rates.

The Federal Reserve's Beige Book report will be posted at 2:00 PM ET tomorrow. It is named simply after the color of its cover but provides opinion from business contacts on economic conditions throughout the U.S. by Fed region. Since the Fed relies heavily on the contents of this report during their FOMC meetings, its results can have a moderate impact on the financial markets and mortgage rates if it reveals a significant surprise. If there is a reaction, it will come during mid-afternoon trading.


 
 

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