October 27th, 2009 4:13 PM by Mel Samick
Tuesday's bond market has opened in positive territory following the release of a much weaker than expected consumer confidence reading. The stock markets are mixed with the Dow up 14 points and the Nasdaq down 26 points. The bond market is currently up 47basis points, which will likely improve this morning's mortgage rates. The Conference Board said that their Consumer Confidence Index (CCI) for October fell to 47.7. This was much weaker than the 53.5 that was expected and indicates that consumers are less optimistic about their own financial situations than many had thought. That is favorable news for bonds and mortgage rates because it means that consumers are less likely to make large purchases in the near future, therefore, limiting economic growth.The Commerce Department will post Durable Goods Orders for September early tomorrow morning. This report gives us a measurement of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items. Analysts are currently calling for an increase in new orders of approximately 1.0%. If we see a larger than expected increase in orders, mortgage rates will probably rise as bond prices fall. A weaker than expected reading should be good news for the bond market and mortgage rates, but this data can be quite volatile from month to month and is difficult to forecast. Also tomorrow is the release of September's New Home Sales. This data covers the remaining 15% of home sales that last week's Existing Home Sales report tracked and is this week's least important data. It is expected to show an increase in sales, but regardless of its results I am not expecting it to have a significant impact on mortgage rates.Tomorrow also brings us the first of the two relevant Treasury auctions. 5-year Notes will be sold tomorrow, which will help us prepare for Thursday's 7-year Note sale. If the sales go wel l, we may see afternoon strength in bonds that lead to downward revisions to mortgage rates. But lackluster interest in them will probably cause bonds to fall and mortgage rates to move higher. Results of the sales are posted at 1:00 PM ET each day.