Wednesday, April 08, 2020


Updated on April 8, 2020 10:16:17 AM EDT

Today’s only potentially relevant events will take place during afternoon trading. The 10-year Treasury Note sale is today with results being posted at 1:00 PM ET. If investor demand for the securities was strong, the bond market could rally after those results are announced. On the other hand, auctions met with a lackluster interest often cause enough of a move in bonds to create an upward revision in mortgage pricing.

Also set for this afternoon but at 2:00 PM ET is the release of the minutes from the March 15th FOMC meeting. Market participants will be looking at them closely as they give us insight to the Feds current thought process and individual Fed member opinions about how bad the economy will get during this pandemic. Any surprises in the release could cause afternoon volatility in the markets and possible changes in mortgage rates mid-afternoon.

Weekly unemployment figures will be released at 8:30 AM ET tomorrow morning. Up until the past three weeks, this release drew little attention because it is only a weekly snapshot. That changed last month when it became the best and freshest indicator of how badly the coronavirus reaction was affecting the employment sector. Last week’s update showed that 6.6 million new claims for unemployment benefits were filed the previous week. Look for another big number, but forecasts range from 3 million to 8 million new filings. A high number of new claims is good news for bonds and mortgage pricing.

Marchs Producer Price Index (PPI) will also be posted early tomorrow morning. It measures inflationary pressures at the producer level of the economy. If inflation is rapidly rising, bonds become less appealing to investors, leading to bond selling and higher mortgage rates. However, inflation isn’t a concern in the current economic situation. Accordingly, unless it shows a huge surprise it likely will not have a noticeable influence on mortgage rates.

Fed Chairman Powell is speaking via webcast tomorrow morning for the Brookings Institute in Washington D.C. He is scheduled to speak at 10:00 AM ET regarding the economic impact of the coronavirus and the Fed’s response to it. He will take questions after, so look for this to possibly be a driving force in tomorrow’s morning trading also.

The bond market will close at 2:00 PM ET tomorrow ahead of the Good Friday holiday, reopening Monday morning. Stocks are set for a full day of trading tomorrow but will be closed Friday.

 ©Mortgage Commentary 2020