Wednesday's bond market has opened in negative territory following news from overseas that Russia will start selling some of its U.S. Treasury Securities it currently holds. The stock markets are showing losses with the Dow and Nasdaq both down 24 and 7 points respectively. The bond market is currently down 56 basis points, which will likely push this morning's mortgage rates higher. April's Goods and Services Trade Balance was released this morning, revealing a $29.2 billion trade deficit. This was very close to forecasts, therefore has had little impact on this morning's bond trading or mortgage rates. The Federal Reserve will release its Beige Book this afternoon. This data details economic conditions throughout the U.S. by region. It is relied upon heavily by the Federal Reserve during FOMC meetings in determining monetary policy. If it shows surprisingly softer economic activity, the bond market may thrive and mortgage rates could drop shortly after the 2:00 PM ET release. If it reveals signs of inflation growing, we could see mortgage rates revise higher later today. Also contributing to this morning's bond losses is today's 10-year Treasury Note auction. Traders that are participating in these sales often sell holdings before the auctions for a couple of strategic purposes. If the sale is met with a strong demand from investors, we may see bond prices move higher this afternoon? Assuming the Beige Book doesn't give us negative surprises. However, a lackluster interest could lead to more selling and possibly higher mortgage rates. May's Retail Sales data will be released tomorrow morning. This report measures consumer spending, which is important to the bond market because consumer spending makes up two-thirds of the U.S. economy. Analysts are expecting to see that sales rise 0.5% last month. A smaller than expected rise in sales would be good news for the bond market, and could lead to lower mortgage rates tomorrow.

Mel