Wednesday’s bond market has opened in positive territory following weaker than expected economic data. Stocks are also showing gains with Dow up 97 points and the Nasdaq up 16 points. The bond market is currently up 5/32 (1.88%), but due to weakness in trading late yesterday, we likely will see little change in this morning’s mortgage rates if comparing to yesterday’s morning pricing.
March’s Industrial Production report was posted at 9:15 AM ET today. It showed a 0.6% decline in production at U.S. factories, mines and utilities last month. This was a larger drop than forecasted, hinting at a slowing manufacturing sector. That makes the data favorable for bonds and mortgage rates.
Later today, the Federal Reserve will release their Beige Book report. This report is named simply after the color of its cover but details economic conditions throughout the U.S. by Fed region. Since the Fed relies heavily on the contents of this report during their FOMC meetings, its results can have a fairly big impact on the financial markets and mortgage rates if it reveals any significant surprises. Generally speaking, signs of strong economic growth or inflation rising from the last update would be considered negative for bonds and mortgage rates. Slowing economic conditions with little sign of inflationary pressures would be ideal for mortgage rates. It has a 2:00 PM ET release time, so any reaction will come during mid-afternoon trading.
Tomorrow’s only monthly data is March’s Housing Starts report that tracks groundbreakings of new home construction. It gives us a measurement of housing sector strength and future demand for mortgage credit. It is not considered to be highly important to the markets but does draw enough attention to influence trading if it reveals surprisingly strong or weak numbers. The report will be posted at 8:30 AM ET and is expected to show a sizable increase in starts from February to March due to weather related issues in February. Good news for mortgage rates would be a decline in starts that points toward housing sector weakness.
Last week’s unemployment numbers will also be posted early tomorrow morning. They are expected to show that 280,000 new claims for unemployment benefits were filed last week. The previous week had 281,000 initial claims, so analysts are expecting to see little change. Ideally, we would like to see a sizable increase in claims, indicating employment sector softness. The higher the number of new claims, the better the news it is for mortgage rates. However, since this is only a weekly report, it usually takes a wide variance from forecasts for this data to affect mortgage pricing.