The Commerce Department announced early this morning that new home groundbreakings rose 1.9% last month. This came in their Housing Starts report for September. The monthly increase in percentage was higher than expected, but a sizable downward revision to August's starts created it. The number of new groundbreakings was actually lower than forecasts. Therefore, we can consider the data neutral to slightly favorable for rates. Unfortunately, this report is not considered to be of high importance to the markets, meaning it has failed to have an impact on this morning's pricing.
Tomorrow morning does not have an economic release that we need to be concerned with. However, tomorrow afternoon does bring two events that may influence rates. The first is the 20-year Treasury Note auction results at 1:00 PM ET. If this sale is met with a strong demand from investors, particularly international buyers, bond prices may rise during early afternoon trading. This could lead to a slight improvement in mortgage pricing. On the other hand, a lackluster interest in the securities may create selling in the broader bond market, causing an upward revision tomorrow afternoon.
The second event of the day will be Federal Reserve's Beige Book report that summarizes economic activity through the eyes of business contacts within each Fed region. The Fed relies heavily on this data during their FOMC meetings when making monetary policy decisions, so look for a potential reaction during mid-afternoon afternoon trading. It probably will not cause a major sell off in the stock or bond markets, but the 2:00 PM ET release is still worth watching as it could draw a strong enough of a reaction to change rates slightly.
©Mortgage Commentary 2020
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of Horizon Credit Union.