Updated on June 21, 2021 10:03:09 AM EDT
There is no relevant economic data set for release today. It appears this morning’s about-face in bonds may be tied to comments made by Fed members in virtual speeches that raised alarms about inflation and indicated the Fed is starting to discuss tapering their current bond buying program that is keeping the market liquid. As the Fed starts to slow the rate of their monthly purchases, it is feared the remaining supply in the market will drive prices down and yields higher. That is bad news for mortgage shoppers because mortgage rates tend to track bond yields.
We have plenty to digest the rest of the week also. It brings us the release of six monthly and quarterly economic reports that may influence mortgage rates, in addition to a couple of Treasury auctions and a Fed congressional appearance. There is something scheduled each remaining day of the week that could move mortgage pricing, some noticeably.
Activities start at 10:00 AM ET tomorrow morning with the National Association of Realtors Existing Home Sales report for May. This release tracks resales of existing homes, giving us a measurement of housing sector strength. It is considered to be moderately important to the markets but can influence mortgage rates if it shows a sizable difference between forecasts and actual results. Analysts are currently expecting to see a decline in sales. As with most economic reports we get, weaker than expected numbers would be favorable to mortgage rates.
Also tomorrow is Fed Chairman Powell’s appearance before a House of Representatives subcommittee as part of the Coronavirus Aid package. He will update Congress on the status of the economic recovery from the pandemic and what the Fed is doing to assist. There is a good possibility of seeing the markets react to his words, especially after this morning’s Fed talk caused chaos in the bond market. He will be speaking at 2:00 PM ET, meaning this will be an afternoon event for rates.
Overall, the single most important economic release is Friday’s Personal Income and Outlays with Thursday’s Durable Goods Orders not far behind. Tomorrow was the best candidate for most important day before this morning’s unexpected volatility. The calmest day may end up being Wednesday, but any day could bring a change to rates. Therefore, proceed cautiously if still floating an interest rate and closing in the near future.
©Mortgage Commentary 2021