Thursday’s bond market has opened in positive territory despite a mixed open in stocks and relatively unfavorable economic data. The Dow is currently down 27 points while the Nasdaq is up 12 points. The bond market is currently up 5/32 (2.34%), but due to some weakness late yesterday we should see little change in this morning’s mortgage rates if comparing to Wednesday’s morning pricing.
There were four economic reports posted this morning but only one of them was considered to be key or highly important to the markets. The first, October’s Consumer Price Index (CPI), was the most important of them. The Labor Department reported at 8:30 AM ET that the overall CPI reading was unchanged from September’s level while the more important core data rose 0.2%. Both readings exceeded forecasts by 0.1%, meaning inflationary pressures at the consumer level of the economy were slightly stronger than analysts were expecting. That makes the data slightly negative for mortgage rates.
Last week’s unemployment figures were also posted early this morning. They revealed that 291,000 new claims for unemployment benefits were filed last week, down from the previous week’s revised 293,000 initial claims. The weekly decline was smaller than expected, but the number of claims ends up higher than forecasted because of the upward revision to the previous week. Therefore, we should consider the news neutral to slightly positive for mortgage rates.
The third report of the morning came from the National Association of Realtors at 10:00 AM. They announced that home resales rose last month to their highest level since September 2013. The 1.5% increase was stronger than the no change that was expected, but not enough of a variance to cause much concern in the bond market. The increase in sales points to a slight increase in housing sector strength, meaning the data is slightly negative for mortgage rates.
The final report of the week came from the Conference Board at 10:00 AM ET. They said their Leading Economic Indicators (LEI) for October rose 0.9%. That was a larger increase than analysts were expecting. This means the data is predicting a pretty rapid rate of economic growth over the next several months. Accordingly, we need to consider the report bad news for bonds and mortgage rates. Fortunately, this isn’t a highly influential report and has had a minimal impact on this morning’s rates.
There is nothing of relevance scheduled for release tomorrow, so we will be looking towards stock movement and overseas economic news for mortgage rate direction. If stocks show solid gains, we can expect bonds to move into negative ground and mortgage rates to move a little higher. On the other hand, stock weakness should help boost bonds and possibly improve mortgage pricing tomorrow.