Thursday’s bond market has opened in negative territory, extending yesterday’s afternoon selling. The stock markets are showing minor losses of 32 points in the Dow and 1 point in the Nasdaq. The bond market is currently down 6/32 (1.86%), which with yesterday’s afternoon weakness should push this morning’s mortgage rates higher by approximately .250 of a discount point if comparing to Wednesday’s early pricing.
We saw bond prices start a downward slide early yesterday afternoon that accelerated as the afternoon progressed. This led to widespread upward revisions to mortgage pricing before the day ended. Just how much of an increase you will see depends on the size of the revision your lender made late yesterday.
The first of this morning’s two pieces of relevant economic data was last week’s unemployment numbers at 8:30 AM ET. They showed that the number of new filings for benefits fell to 247,000. This was a decline from the previous week’s 253,000 initial claims and well short of the 263,000 that was expected. The weaker number of claims indicates that the employment sector strengthened last week, making the data negative for the bond and mortgage markets.
Also posted this morning was March’s Leading Economic Indicators (LEI). The Conference Board announced at 10:00 AM that their LEI rose 0.2% last month, falling short of the 0.4% increase that was expected. A downward revision to February’s reading also allows us to label this news as favorable for bonds. Unfortunately, this data just isn’t important enough to offset the current negative momentum in the bond market.
Tomorrow has nothing of importance scheduled for release. Based on what we have seen since yesterday morning, we can expect to see a little more volatility tomorrow as this move in yields settles. We are now in the upper part of the recent range of the benchmark 10-year Treasury Note yield, but still below a critical threshold that raises concern on mortgage rate direction. As long as we stay well away from 2.00%, the likelihood of seeing a large upward move in rates is fairly minimal in my opinion.