Yesterday's 7-year Treasury Note auction didn't go as well as Wednesday's 5-year Note sale. The benchmarks showed investors were more interested in the 5-year Notes than the 7-year Notes, revealing an average demand compared to other recent sales of the same securities. It is unlikely that yesterday's afternoon bond strength is related to the auction results, but we did see a favorable move shortly after they were announced at 1:00 PM ET. We feel it is more or less a coincidence and are labeling the auction as neutral for rates.
The University of Michigan released their revised Index of Consumer Sentiment for April at 10:00 AM ET this morning. They announced a reading of 52.2 that was higher than expected and an increase from the preliminary estimate of 50.8 earlier this month. The increase means surveyed consumers felt better about their own financial and employment situations than they did previously. This is a sign of potential economic strength because rising confidence usually translates into stronger consumer spending that makes up over two-thirds of the U.S. economy. Accordingly, today's reading is bad news for bonds and mortgage rates.
Next week has plenty scheduled that is likely to influence the markets and affect mortgage rates. It starts light with nothing of importance scheduled for Monday and then begins to get interesting with some moderately important data Tuesday. Wednesday begins the highly important economic releases. This is when we will get the initial Gross Domestic Product (GDP) reading for the 1st quarter and the report that includes the Fed's preferred inflation data. Thursday follows with the ISM manufacturing index before the almighty monthly Employment report Friday morning. Look for details on all of next week's activities in Sunday evening's weekly preview.
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