July 27th, 2009 7:19 AM by Eric Fang
We will have around $115 Billion Auction of Tresury this week. The rate will not be good until the confirmation that much supply is not an issue.
The two most important are Wednesday's 5-year Note and Thursday's 7-year Note sales. The last auctions of these securities were met with very good demand from investors. That led to bond strength following the sales.
If investor interest is strong again, we can expect the broader bond market to rally and mortgage rates to move lower. However, lackluster demand could lead to bond selling and higher mortgage rates Wednesday and Thursday afternoons.
Let's wait and see.