Updated on April 23, 2024 10:03:47 AM EDT

Marchs New Home Sales report was posted at 10:00 AM ET this morning, revealing an 8.8% jump in sales of newly constructed homes. This was a larger increase in sales than was expected, indicating strength in the new home portion of the housing market. Fortunately, this report covers only a small portion of all home sales in the U.S., limiting its impact on this morning’s bond trading.

Tomorrow has an important economic release scheduled for 8:30 AM ET, followed by an afternoon event that has the potential to change rates slightly. Marchs Durable Goods Orders report is first on the day’s calendar. It gives us an indication of manufacturing sector strength and tracks orders for big-ticket items at U.S. factories. These are products that are expected to last three or more years, such as appliances, electronics and airplanes. Current forecasts show a 2.4% increase in new orders, signaling growth in the manufacturing sector. This data is known to be volatile from month to month, meaning a variance from expectations won’t affect bond trading or mortgage pricing like it would if it came in many other reports. Good news for mortgage rates would be a decline in orders.

The second event of the day will be results of tomorrow’s 5-year Treasury Note auction at 1:00 PM ET. If the sale draws a weak interest from investors, we may see selling in the bond market that leads to upward revisions in mortgage rates before the end of the day. On the other hand, strong sales usually make government securities more attractive to investors and bring more funds into bonds, pushing mortgage pricing lower. If there is a reaction to the results announcement, it will come during early afternoon hours.

 ©Mortgage Commentary 2024