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Thursday’s bond market has opened down slightly with stocks in positive ground and despite today’s economic data that showed slightly favorable results. The stock markets are showing early gains with the Dow up 55 points and the Nasdaq up 7 points. The bond market is currently down 3/32, which will likely push this morning’s mortgage rates higher by approximately .125 of a discount point if comparing to yesterday’s morning pricing.
The Labor Department announced early this morning that 350,000 new claims for unemployment benefits were filed last week. This was a decline from the previous week’s revised total of 362,000 initial claims, but higher than the 341,000 that was expected. That indicates the employment sector strengthened a bit last week, however, not as much as many had thought. Therefore, we can consider the data neutral to slightly favorable for the bond market and mortgage rates.
August’s Goods and Service Trade Balance report was also posted at 8:30 AM ET this morning. It revealed a trade deficit of $38.8 billion in August, nearly matching forecasts of $38.6 billion. This data does not usually directly affect bond trading or mortgage rates but does influence the value of the U.S. dollar versus other currencies, which is fairly important to international investors when buying or selling U.S. securities. This morning’s report did not give us enough of a variance to be of any factor in today’s bond trading or mortgage pricing.
Tomorrow has two pieces of economic data that could affect mortgage rates. The Commerce Department will post Durable Goods Orders for September at 8:30 AM ET. This report gives us a measurement of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items, or products that are expected to last three or more years such as appliances, electronics and airplanes. Analysts are currently calling for an increase in new orders of approximately 3.5%. If we see a much larger increase in orders, mortgage rates will probably rise as bond prices fall. On the other hand, a significantly weaker than expected reading should be good news for the bond market and mortgage rates, but this data can be quite volatile from month to month and is difficult to forecast. That means a small variance from forecasts likely will have little impact on tomorrow’s mortgage rates.
The week’s last report comes just before 10:00 AM ET tomorrow when the University of Michigan updates their Index of Consumer Sentiment for this month. This report is moderately important because it helps us measure consumer confidence, which is believed to indicate consumers’ willingness to spend. If consumers are more confident in their own financial and employment situations, they are more apt to make a large purchase in the near future. Since consumer spending makes up over two-thirds of the U.S. economy, any related data is watch closely. Current forecasts show this index falling from the preliminary reading of 75.2 to 74.5, meaning confidence was not as strong this month as previously thought. That would be good news for the bond and mortgage markets.