Thursday's bond market has opened in positive territory due to a negative open in stocks and some weaker than expected economic news.
The stock markets are showing minor losses with the Dow down 15 points and the Nasdaq down 4 points. The bond market is currently up 13/32, but I don't believe we will see much of an improvement in this morning's mortgage rates due to weakness in trading late yesterday.
If your lender did revise their rates upward yesterday afternoon, then you should see a small improvement in this morning's pricing.
In other words, today's early rates should be very close to yesterday's morning pricing.
There were three pieces of economic data posted this morning, but none of them were considered to be highly important to the markets.
The Labor Department started them with the release of last week's unemployment figures early this morning. They announced that 387,000 new claims for unemployment benefits were filed last week, down slightly from the previous week's revised total of 389,000 initial claims. Analysts were expecting to see 380,000 claims, based on the 386,000 that was previously announced for the week before. This means that we saw a larger than expected number of new claims, indicating a weaker than expected employment sector last week. That makes the data good news for the bond market and mortgage rates.
The National Association of Realtors announced late this morning that sales of existing homes fell 1.5% last month. This was very close to analysts' forecasts, preventing it from influence mortgage rates. The fact that we saw a decline in home resales indicates a softening housing sector, which is favorable news for the bond market and mortgage rates. However, since the data nearly matched forecasts, its impact on this morning's pricing has been minimal.
May's Leading Economic Indicators (LEI) was the third and final report of the day. The Conference Board announced a 0.3% increase in the LEI, meaning it is predicting minor economic growth over the next several months. That was stronger than what many had expected, making the data negative for bonds and mortgage rates. Fortunately, this data is not considered to be highly influential, so it has had little effect on mortgage rates this morning.
Tomorrow has nothing of relevance scheduled, so look for the stock markets to influence bond trading. If we see minor losses or gains in stocks, I suspect the bond market will remain fairly calm, keeping mortgage rates close to today's levels. If stocks rally, bonds will probably suffer and mortgage rates will rise slightly. And we can expect the opposite if the major stock indexes show noticeable losses tomorrow morning. By James Brooks First Financial Services
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