This Week
The bond and mortgage markets will likely be slightly weaker in price on Monday after a very quiet session last Friday. This week has March existing and new home sales; both are expected to be slightly better than February. March durable goods orders on Wednesday; durables are thought to be down overall but up slightly when the volatile transportation orders are extracted. On Friday markets will get the first of three reports on Q2 GDP; the advance report starts three reports on GDP over the next two months. The estimate for the advance report is +3.1%; usually the report is revised the following month as some of the details in the advance report are not available when the data is compiled. On Tuesday Treasury will begin its monthly auctions of 2s, 5s and 7-year notes totaling $99B.
For the last two weeks the bond and mortgage markets have stayed in a narrow range. The 10-year Treasury note, driver for mortgage rates, has been confined in a 6 bp range from 1.75% to 1.69%. The note has been unable to break strong resistance at 1.69% resulting in mortgage rates remaining about unchanged since early April. Interest rate markets are driven these days by each move in the key stock indexes; that market has experienced increased volatility but interest rates haven’t shown much change, remaining in their tight ranges. This week 170 of the S&P 500 will report earnings. Q2 earnings so far have shown a mixed picture, some good, others not meeting expectations. Expect continued high volatility in the equity markets this week. If the 10-year note exceeds 1.75% on a closing basis, interest rates will likely edge higher.