Market Commentary

Updated on August 21, 2019 10:29:08 AM EDT

July's Existing Home Sales report was posted by the National Association of Realtors at 10:00 AM ET this morning. They announced a 2.5% increase in home resales, exceeding expectations by a small margin. The increase in sales is technically bad news for bonds and mortgage rates because strength in the housing sector makes broader economic growth easier. However, it is not this report that is driving bond trading this morning. This data has had a minimal impact on today's rates.

The minutes from last month's FOMC meeting will be released at 2:00 PM ET. There is a pretty good possibility of the markets reacting to them following their release. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation concerns in the economy, economic growth and the Fed's potential plans for lowering key short-term interest rates again. If there is a market reaction to them, it will be evident during mid-afternoon trading. This is one of those events that can cause significant movement in rates after its release or be a non-factor. Therefore, be prepared for a move, but not surprised if there is no reaction.

Tomorrow only has minor economic data for the markets to digest. In addition to the weekly unemployment update, the Conference Board will post its Leading Economic Indicators (LEI) for July. They are a New York-based business research group and not a governmental agency. The index attempts to measure economic activity over the next three to six months. A higher than expected reading is bad news for the bond market because it would be predicting that the economy may be strengthening more than thought. However, a weaker reading means that the economy may not grow as much as predicted, making stocks less appealing to investors. This also eases economic growth concerns in the bond market and could lead to slightly lower mortgage rates. It is expected to show an increase of 0.2% in the index, indicating moderate economic growth over the next couple of months. It will take a sizable difference between forecasts and its actual reading for this report to noticeably influence mortgage rates.

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