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Monday’s bond market has opened in positive territory even though this morning’s economic data gave us stronger than expected results. The overseas crisis between Ukraine and Russia has caused global stocks to go into selling mode, shifting funds into safer investments. The Dow is currently down 151 points while the Nasdaq has lost 36 points. The bond market is currently up 10/32, which should improve this morning’s mortgage rates by approximately .125 of a discount point.
January’s Personal Income and Outlays report was posted at 8:30 AM ET this morning. The Commerce Department announced that personal income rose 0.3% in January while spending rose 0.4%. The income reading matched forecasts, but the rise in spending exceeded expectations of a 0.1% increase. This means that consumers spent more than analysts were expecting. Since consumer spending fuels economic growth and we saw a moderate rise in income that gives consumers the ability to spend, we should consider this data negative for the bond market and mortgage rates.
The Institute for Supply Management’s (ISM) manufacturing index for February came at 10:00 AM ET. They announced a reading of 53.2 that was stronger than the 51.6 that was expected, meaning more surveyed trade executives felt business improved last month than January and also more than analysts were expecting to see. That is a sign that the manufacturing sector was stronger than thought, making the data negative for the bond and mortgage markets. This is considered to be an important piece of data, so fortunately the overseas geopolitical news is helping to minimize the impact of this report.
There is nothing of importance scheduled for release tomorrow, so look for geopolitical events (Ukraine) and stock movement to drive bond trading and mortgage rates. The rest of the week has five more relevant reports for the markets to digest, including the extremely important Employment report. Most of the other reports are moderate to fairly important to the markets, meaning they have the potential to affect mortgage rates but usually don’t cause a noticeable change.
Overall, look for a fairly active week in the markets and mortgage rates, especially the late in the week. Friday is the most important day due to the significance of the monthly Employment report but we could also see a movement in rates any day. The lightest day will probably be tomorrow unless something unexpected happens or the conflict with Ukraine and Russia progresses further.