As we talked about yesterday, the stock market appears to be directing traffic for the bond market. Monday was a flat day for stocks, and it was a flat day for bonds, too. Mortgage rates idled.
Tuesday, with no economic data hitting the wires, market participants will be looking for direction elsewhere.
Some likely candidates include:
- The price of oil. If oil prices continue to rise, it will place inflationary pressure on businesses and consumers. That is bad for mortgage rates.
- The value of the dollar. A recent rally in the dollar should attract foreign investors to the U.S. markets. That is good for mortgage rates.
- Corporate earnings statements. Apple and American Express both showed well in Q3. A rally in the broader stock market will pull money from the bond markets. This is bad for mortgage rates.
Mostly, markets are taking very few risks in advance of the Federal Open Market Committee meeting next week. Momentum rules.
