Updated on June 16, 2021 10:03:09 AM EDT
Yesterday’s 20-year Treasury bond auction went very well with the benchmarks pointing towards a strong demand from investors. The bond market had little reaction to the 1:00 PM ET results posting, certainly not enough of a move to affect rates. While the strong sale shows investor demand for longer-term securities remains high, traders were likely more concerned about today’s events than the auction results.
Mays Housing Starts was posted at 8:30 AM ET this morning, revealing a 3.6% increase in new home groundbreakings. That was a bit stronger than expected, but not enough to draw much attention to what is considered to be a minor economic report. Accordingly, we have not seen a reaction to the news. Traders are waiting for this afternoon’s activities before making a move.
We also have today’s FOMC meeting adjournment at 2:00 PM ET to watch in addition to revised economic projections from the Fed and a press conference with Fed Chairman Powell. There is no chance of them changing key short-term interest rates at this meeting. However, the markets will also be looking for any indication about the Feds future monetary policy plans, specifically about bond purchases and other moves that will affect their balance sheet or when they may start raising key short-term interest rates. Along with the adjournment and post-meeting statement, we will also get the revised economic projections at 2:00 PM ET. They will be followed by the press conference at 2:30 PM ET. There is a relatively strong possibility of seeing afternoon volatility and possibly a change to mortgage rates during mid-afternoon trading today.
Tomorrow has two minor economic reports scheduled (weekly unemployment update and Leading Economic Indicators), but they will be addressed in this afternoon’s update that will be posted shortly after the markets have an opportunity to react to the Fed events.
©Mortgage Commentary 2021