Today's sole relevant report was July's Consumer Price Index (CPI) that revealed a 0.6% rise in both the overall and core readings. These were both well above expectations, indicating inflationary pressures at the consumer level of the economy were stronger than thought. Since rising inflation erodes the value of a bond's future fixed interest payments and makes them less appealing to investors, this report was bad news for mortgage rates.
The first of this week's two Treasury auctions that we will be watching comes this afternoon when 10-year Notes will be sold. If investor demand for the securities is strong, we could see bonds improve later today, possibly leading to a slight downward revision in mortgage rates. On the other hand, a lackluster interest in the securities may cause an increase in rates. Results will be posted at 1:00 PM ET, meaning if there is a reaction to the auction, it will come during early afternoon trading.
Tomorrow does not have any monthly or quarterly economic reports for the markets to digest, but we will get last week's unemployment figures at 8:30 AM ET. The weekly updates were practically non-factor in the markets before the pandemic. Now they draw plenty of attention as they give us the most recent snapshot of the employment sector, specifically new claims for unemployment benefits. They are expected to show 1.15 million new claims were filed last week, down slightly from the previous week. Because a high number of claims is a sign of a weak employment sector, the higher the number of new filings, the better the news it is for bonds and mortgage rates.
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