Market Commentary

Updated on May 9, 2025 10:13:36 AM EDT

Yesterday's 30-year Treasury Bond auction failed to live up to Tuesday's sale. The benchmarks we use to gauge investor demand indicated Tuesday's auction drew much more interest than yesterday's sale did. Soft auctions often lead to broader weakness in the bond market after results are announced at 1:00 PM ET. We did see a negative move after yesterday's results were posted, but bonds were already in selling mode long before the announcement. In other words, the below-average demand is not the main reason for yesterday's heavy sell-off in bonds.

So, if it wasn't the auction that led to the bond selling and widespread intraday upward revisions to mortgage pricing, what caused it? There is no clear answer. President Trump's announcement of a trade deal with the UK is the easy answer. Lower tariffs mean stronger economic growth and less likely of a recession. However, it also should ease some inflation concerns that have been pressuring bonds the past couple of months. If this is the reason for the selling, the reaction seems to be overkill and not justified.

Today's only scheduled events that may influence mortgage rates are a large number of speaking engagements by members of the Federal Reserve. There are at least nine different events where a member is either the sole speaker or participating in a group discussion. Most of the event topics appear to be fairly mundane, but one or more of these events may yield a surprise tidbit that is relevant to factors currently driving the markets, such as inflation, tariffs and the slowing economy. These very well may be a non-factor to the markets, but the potential does exist for a reaction, especially when there is no economic data for traders to focus on.

Next week brings us the release of some very important influential economic data, including two key inflation indexes and consumer spending data. The week starts light with nothing scheduled Monday that is considered to be relevant, leaving weekend headlines to drive trading as the new week begins. The most important data is set for release Tuesday and Thursday. Look for details on all of next week's activities in Sunday evening's weekly preview.