July 29th, 2009 2:38 PM by Mel Samick
Wednesday's bond market has opened in positive ground following the release of weaker than expected economic data and another soft opening in stocks. The Dow is currently down 267 points while the Nasdaq has slid 8 points. The bond market is currently up 6/32, which should improve this morning's mortgage rates.The Commerce Department reported this morning that new orders for durable goods fell 2.5% last month. This was much weaker than the 0.5% decline that was expected, indicating that manufacturing activity for big-ticket items is slowing. That is good news for bonds and mortgage rates because a slowing manufacturing sector makes an economic recovery less likely anytime soon. However, a secondary reading that tracks new orders excluding the most volatile transportation-related orders showed a 1.1% increase. That was much higher than analysts were expecting, but fortunately bond traders have ignored the news.We have an afternoon release that may affect bond trading and mortgage rates. The Federal Reserve will release its Beige Book report at 2:00 ET today. This report is named simply after the color of its cover, but it is considered to be important to the Fed when determining monetary policy during their FOMC meetings. It details economic activity and conditions by region throughout the U.S. Since Fed Chairman Ben Bernanke's testimony to Congress last week gave us a recent update, I don't think we will see any significant surprises in this report. Therefore, we will likely see little movement in mortgage rates this afternoon as a result of this report, but the possibly does exist.Also today is the 5-year Treasury Note auction. Results of the sale will be posted at 1:00 PM ET. If it was met with a strong demand, we may see bond prices rise and mortgage rates fall during afternoon trading. However, a lackluster interest could lead to higher mortgage rates later today.There is no relevant monthly or quarterly economic data scheduled for release tomorrow. The Labor Department will give us last week's unemployment figures, but this data is not considered to be of high importance because it basically tracks only a week's worth of new claims. It is expected to show that 585,000 new claims for unemployment benefits were filed last week. The larger the number, the better the news for bonds and mortgage rates. But, unless it varies greatly from forecasts, I don't see this news having much of an influence on bond trading or mortgage rates tomorrow.