Wednesday’s bond market has opened in negative territory following stronger than expected economic data. Despite that news, the major stock indexes are showing early losses with the Dow down 42 points and the Nasdaq down 14 points. The bond market is currently down 12/32 (1.95%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point.
March’s Existing Homes Sales report was posted at 10:00 AM ET, giving us a measurement of housing sector strength. The National Association of Realtors reported that home resales rose 6.1% last month, exceeding forecasts. This means that the housing sector was stronger than many had thought, making the data negative for bonds and mortgage rates.
Tomorrow has two pieces of data that we will be watching, but neither is considered to be highly important to the markets. The first will be last week’s unemployment figures at 8:30 AM ET. They will help us measure employment sector strength or weakness. Analysts are expecting to see that 228,000 new claims for unemployment benefits were filed last week, down from the previous week’s 294,000 initial claims. Rising claims for benefits indicate a softening employment sector, so the higher the number the better the news it is for bonds and mortgage rates. However, because this is only a weekly report, its impact on rates is usually kept to a minimum unless it shows a significant variance from forecasts.
Also tomorrow but at 10:00 AM ET will be the release of March’s New Home Sales report. This is similar to today’s Existing Home Sales release except tomorrow’s report tracks sales of newly constructed homes. It also gives us an indication of housing sector strength and future mortgage credit demand, however, unless it varies greatly from analysts’ forecasts I am not expecting the data to cause much movement in mortgage rates. Analysts are currently forecasting a decline in sales.