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Friday’s bond market has opened up slightly following the release of somewhat favorable economic news. The stock markets are also showing fairly minor gains with the Dow up 33 points and the Nasdaq up 23 points. The bond market is currently up 5/32, but due to weakness in trading late yesterday we will likely see little change in this morning’s mortgage rates.
The Commerce Department gave us the first of today’s two relevant economic reports. They announced at 8:30 AM ET that new orders for durable goods or big-ticket products rose 3.7% last month, nearly matching forecasts of a 3.5% increase. That was not enough of a variance in this volatile data to cause any concern or joy in the bond and mortgage markets. Although, it is a solid growth number, indicating that the manufacturing sector grew during the month. However, a secondary reading that excludes high cost and more volatile transportation-related orders, such as new airplanes, came in with a 0.1% decline when it was expected to rise 0.3%. Therefore, we should consider the data neutral to slightly positive for the bond market and mortgage rates.
At 9:55 AM ET this morning, the University of Michigan posted their revised Index of Consumer Sentiment for this month. It showed a reading of 73.2 that fell short of the 74.5 that was expected and was a decline from the preliminary reading of 75.2. This means that surveyed consumers were less optimistic about their own financial and employment situations than previously thought, likely due to the government shutdown the first half of the month. That is fairly good news for the bond and mortgage markets because waning confidence usually translates into weaker levels of consumer spending that restricts overall economic growth. Unfortunately, this was a relatively minor miss in a moderately important report, so the impact it has had on this morning’s bond trading and mortgage pricing has been minimal.
Next week is likely to be an active one for the financial markets and mortgage rates. We do get data Monday with the release of September’s Industrial Production report before we head into key readings of consumer spending and inflationary pressures Tuesday and Wednesday. There is also a two-day FOMC meeting and a couple of fairly relevant Treasury auctions the middle part of the week. We then close with a very influential reading of manufacturer sentiment Friday morning. We won’t get October’s Employment report Friday as originally scheduled because the shutdown pushed it back to the following Friday.