Waiting for Results of Bond Auction

Waiting for Results of Bond Auction

Both the stock and bond markets are relatively flat so far this morning, as the market awaits the results of a bond auction that could influence the markets in one direction or the other. In terms of economic news, today is relatively light. However, we did get an updated report on Consumer Confidence, which showed that consumers are feeling less confident than the month prior and less than the markets anticipated. In addition, the Case Shiller Index showed that the pace of home value appreciation is also slowing. This is a healthy move lower, as the past pace is not sustainable long term. This will continue to slow as the months progress.

 

President Trump has an important meeting with leaders from China today to talk about a solution to end the on-going trade battle. It was discovered recently that China violated US imposed sanctions on Iran. This could add to the volatility of today’s meeting. Later in the day, as news of the outcome of the meeting is released, we could see markets react. So, we must be on guard.

 

Tomorrow is a big day for the markets, highlighted by the Fed announcement coming at noon, MST. My guess is that the Fed will show it is softening its stance against raising rates, which could help mortgage interest rates. However, anything is possible.

 

Although there is no reason to rush to lock, mortgage bonds remain within a sideways trading range. Unless bonds breakout to the upside, this will limit the potential overall improvement. The safe play for those needing to close in the coming days remains to take a cautious approach and either lock or closely watch the markets.