Market Commentary

Updated on May 22, 2018 10:20:06 AM EDT

There is nothing scheduled for release that is likely to influence mortgage rates. April's New Home Sales report will start this week's schedule of events at 10:00 AM ET tomorrow. This data gives us a small measurement of housing sector strength and future mortgage credit demand but probably will not have much of an impact on mortgage pricing unless it shows a sizable variance from forecasts. Analysts are expecting to see a decline in sales from March's level, meaning the new home portion of the housing sector softened last month.

There are two more events set for tomorrow, but they come during afternoon trading. One is the minutes of the last FOMC meeting. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation concerns or economic growth. The goal is to form opinions about the Fed's next move regarding interest rates, which is expected to come at next month's meeting. Since the minutes will be released at 2:00 PM ET, if there is a market reaction to them it will be evident during mid-afternoon trading.

Also tomorrow is the first of this week's two Treasury auctions that are worth watching. The Fed will auction 5-year Notes tomorrow and 7-year Notes on Thursday. Neither of these sales will directly impact mortgage pricing, but they can influence general bond market sentiment. If the sales go poorly, we could see broader selling in the bond market that leads to upward revisions to mortgage rates. On the other hand, strong sales usually make bonds more attractive to investors, bringing more funds into bonds. The buying of bonds that follows often translates into lower mortgage rates. Results of the sales will be posted at 1:00 PM ET each auction day, so look for any reaction to come during early afternoon hours tomorrow and Thursday.

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