Friday’s bond market has opened in positive territory due to weaker than expected economic data. The stock markets are fairly calm but showing minor losses with the Dow down 28 points and the Nasdaq down 12 points. The bond market is currently up 12/32 (1.75%), which should improve this morning’s mortgage rates by approximately .125 of a discount point.
Yesterday’s 30-year Bond auction followed suit of Wednesday’s 10-year sale by drawing a strong level of investor interest. However, yesterday’s auction results did not have the positive impact on the bond market that Wednesday’s sale did. Despite most of the benchmarks we use to gauge investor demand showing a strong level of interest in the securities, the broader bond market didn’t really have much a reaction after results were posted at 1:00 PM ET. Therefore, we had no intraday revision to mortgage pricing.
The first of this morning’s two relevant economic reports was March’s Industrial Production data at 9:15 AM ET. It showed a 0.6% decline in output at U.S. factories, mines and utilities, indicating manufacturing sector weakness. Analysts were expecting to see little change in production, so we can consider the data good news for bonds and mortgage rates. This is especially true since February’s production calculation was revised lower from down 0.5% to also down 0.6%.
Late this morning, the University of Michigan’s Index of Consumer Sentiment was posted, coming in at 89.7. This was well below expectations of 91.9 and was a decline from March’s 91.0. This reading means fewer surveyed consumers felt better about their personal financial and employment situations than many had thought. Because waning confidence usually means weaker consumer spending levels, this is also good news for the bond and mortgage markets.
Next week has only a couple of economic reports worth watching. The theme is mostly housing, which doesn’t usually cause significant movement in the markets or mortgage pricing. There is nothing of importance set for Monday. Look for details on next week’s calendar in Sunday evening’s weekly preview.