Wednesday's bond market has opened in positive territory after this morning's following news of a much weaker than expected economy during the 1st quarter of the year. The stock markets are rallying with the Dow up 170 points while the Nasdaq has gained 43 points. The bond market is currently up 5/32, but we will see an increase in this morning's mortgage rates of approximately .125 of a discount point due to weakness late yesterday.

This morning's major economic news was the release of the preliminary version of the 1st Quarter Gross Domestic Product (GDP). The GDP is the sum of all products and services produced in the U.S. and is considered to be the best indicator of economic growth or contraction. Today's release revealed that activity fell at an annual rate of 6.1% during the first three months of the year. This was much weaker than the 4.7% decline that was expected and shows that the economy was slowing quicker than thought. This is good news for bonds and mortgage rates because slowing economic activity eases inflation concerns and makes bonds and mortgage related securities more attractive to investors.

We also have the adjournment of the FOMC meeting this afternoon. The meeting began yesterday and will likely end with an announcement of no change to key short-term interest rates. But we will likely see volatility in the markets following the 2:15 PM ET post-meeting statement as investors learn the amount of Treasury securities that the Fed purchased and intend to purchase in the near future. If they announce that more debt was bought than was expected, we could see a bond rally this afternoon that leads to lower mortgage rates. However, a disappointing total could create a sell-off and cause an upward revision to rates later today.