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Thursday’s bond market has opened in positive territory despite a sizable
drop in new unemployment claims. The stock markets are mixed after
yesterday’s rally that pushed the Dow to a new record level. It is
currently up 29 points while the Nasdaq has slipped 2 points. The bond
market is currently up 6/32, but due to weakness in trading late yesterday
we will likely see only a slight improvement in this morning’s mortgage
rates if we get one at all.
Today’s only economic news came from the Labor Department, who reported
that 346,000 new claims for unemployment benefits were filed last week.
This was a good sized drop from the previous week’s revised total of
388,000 and well short of the 365,000 that analysts were expecting. That
indicates employment sector strength, making the data bad news for the bond
market and mortgage rates. However, to the benefit of mortgage shoppers, it
has not seemed to impact this morning’s trading.
At 1:00 PM ET today, we will get the results of the 30-year Treasury Bond
auction. Yesterday’s 10-year Note sale was met with a lackluster interest
as several gauges we use to measure investor demand showing below-average
levels. That doesn’t give us a lot to look forward to in today’s sale. Look
for any reaction to come during early afternoon trading. A strong demand in
the sale should boost the broader bond market and could lead to afternoon
improvements in mortgage rates.
Tomorrow morning has three pieces of economic data that is likely to
influence mortgage rates with two of them considered to be highly
important. The Labor Department will start the day by posting March's
Producer Price Index (PPI) at 8:30 AM ET. It will give us an important
measurement of inflationary pressures at the producer level of the economy.
There are two portions of the report that analysts watch- the overall
reading and the core data reading. The core data is more important to
market participants because it excludes more volatile food and energy
prices. If it shows rapidly rising prices, inflation fears may hurt bond
prices since it erodes the value of a bond's future fixed interest
payments, leading to higher mortgage rates. A good sized decline in prices
would be good news for the bond market and mortgage rates. Current
forecasts are calling for a 0.1% decline in the overall reading and a 0.1%
rise in the core data.
Also early tomorrow morning, the Commerce Department will release March's
Retail Sales data. This piece of data gives us a key measurement of
consumer spending levels, which is very important because consumer spending
makes up over two-thirds of the U.S. economy. Forecasts are calling for no
change in sales from February to March. If we see an increase in spending,
the bond market will likely fall and mortgage rates will rise as it would
indicate consumers are spending more than thought, fueling economic growth.
However, a weaker than expected reading could push bond prices higher and
mortgage rates lower, especially if the PPI gives us favorable results
also.
The final release of the week is the University of Michigan's Index of
Consumer Sentiment at 9:55 AM ET. Their consumer sentiment index will give
us an indication of consumer confidence, which hints at consumers'
willingness to spend. If confidence is rising, consumers are more apt to
make large purchases. But, if they are growing more concerned of their
personal financial situations, they probably will delay making that large
purchase. This influences future consumer spending data and can have a
moderate impact on the financial markets. Good news would be a sizable
decline from March's 78.6 reading. Current forecasts are calling for a
reading of approximately 78.0.
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... Lock if my closing was taking place between
21 and 60 days... Float if my closing was taking place over 60 days from
now...
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