Today's market update

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Thursday’s bond market has opened flat with this morning’s economic data giving us mixed results and the stock markets showing relatively minor gains. The Dow is currently up 32 points while the Nasdaq has gained 5 points. The bond market is nearly unchanged from yesterday’s close, which should keep this morning’s mortgage rates at yesterday’s levels. The final revision to the 4th Quarter GDP was released early this morning, revealing a 0.4% increase. This was slightly stronger than forecasts of a 0.3% rise and an upward revision from the 0.1% that was estimated last month. That indicates the economy was a bit stronger during the last three months of last year than previously thought, making the data slightly negative for the bond market and mortgage rates. However, the age of this data has helped prevent much of a reaction to the news. Also posted this morning was the weekly unemployment update from the Labor Department. They reported early this morning that 357,000 new claims for unemployment benefits were filed last week, up from the previous week’s revised total of 341,000. This is good news for the bond and mortgage markets because it hints that the employment sector weakened last week. Early this afternoon, we will get the results of today’s 7-year Treasury Note auction. Yesterday’s 5-year Note sale was uneventful with most of the benchmarks that we use to gauge investor demand showing an average level of interest. That gives us little to be optimistic or concerned about with today’s sale. If investor demand was strong, we could see strength in the broader bond market during afternoon trading, possibly leading to small improvement in mortgage pricing. Results of the sale will be posted at 1:00 PM ET, so look for any reaction to come shortly after. It is worth noting that the bond market will close at 2:00 PM ET today ahead of the Good Friday holiday while stocks will be open for a full day. The bond and stock markets will be close tomorrow due to the holiday, reopening Monday morning. It is possible to see traders sell some holdings prior to the holiday to protect themselves over the long weekend, but this will likely have a minimal impact on today’s mortgage rates. Despite the holiday and the fact that the markets are closed tomorrow, we will still get a couple of economic reports. The first is February's Personal Income & Outlays report at 8:30 AM ET. This data helps us measure consumers' ability to spend and current spending habits, which is important to the mortgage market because of the influence that consumer spending- related information has on the financial markets. If a consumer's income is rising, they are more likely to make additional purchases in the near future. This raises inflation concerns, adds fuel for economic growth and has a negative effect on the bond market and mortgage rates. Current forecasts are calling for a 0.8% increase in income and a 0.6% rise in spending. Smaller than expected increases would be ideal for bond traders and mortgage shoppers. The final report of the week comes from the University of Michigan just before 10:00 AM ET tomorrow. Their revision to their March Consumer Sentiment Index will give us another indication of consumer confidence, which hints at consumers' willingness to spend. Rising confidence is considered bad news for the bond market and mortgage pricing because it means consumers are more apt to make a large purchase in the near future. Tomorrow’s report is expected to show a 72.4 reading, which would be a small increase from the preliminary reading of 71.8. Favorable results for bonds and mortgage rates would be a decline in confidence, but we will need to wait for Monday morning for the markets to react to these reports. If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...       Alan Russell 161 South San Antonio Rd. | Los Altos, CA 95022 Ph: 650-947-2296 | Fax: 408-335-1118 alanrussell@princetoncap.com CLICK HERE TO STOP RECEIVING OUR REPORT