Daily Market Update

Updated on March 22, 2019 11:01:26 AM EDTSubscribe To Receive Daily Market Updates
Friday’s bond market has opened up sharply following weaker economic data from overseas that has led to heavy stock selling. The Dow is currently down 283 points while the Nasdaq has lost 100 points. The bond market is currently up 30/32 (2.43%), which should improve this morning’s mortgage rates by approximately .250 of a discount point.

Today’s only relevant domestic economic data was February's Existing Home Sales at 10:00 AM ET. The National Association of Realtors announced a surprising 11.8% jump in home resales last month, exceeding forecasts by a fairly wide margin. Fortunately, this data is only moderately important and the concerns about the global economy is taking centerstage.

Something that is extremely newsworthy is the fact that today’s bond rally created an inversion of yields, the first time it has happened since 2007. That means that rates on longer-term securities are lower than securities with shorter terms. In essence, under today’s scenario, it is beneficial to loan the government money for a much shorter period of time as it pays more interest than longer term securities. The relevance to mortgage rates is that this is widely considered to be a predictor of an economic recession. Following the dovish or concerning comments about the economy from the Federal Reserve earlier this week, this is a hugely bond-friendly event. The better news is that there appears to be more room for yields and mortgage rates to fall. I would not be surprised to see the 10-year yield get some resistance in the area of 2.37%. Since mortgage rates tend to track bond yields, good news is for yields to continue to fall.

Next week brings us plenty of economic data in addition to a couple of potentially relevant Treasury auctions. Some of the data is pretty important to the markets, making it likely to be another active week for mortgage rates. None of the data is set for release Monday. Look for details on all of next week’s activities in Sunday evening’s weekly preview.


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