Wednesday’s bond market has opened in positive territory following the release of a bit of favorable economic news. The stock markets are showing minor gains during early trading with the Dow up 37 points and the Nasdaq up 11 points. The bond market is currently up 4/32 (2.17%), but I don’t believe that is enough to see an improvement in this morning’s mortgage rates.
Last week’s unemployment figures was the only relevant economic report posted this morning. Their 8:30 AM ET release revealed that 298,000 new claims for unemployment benefits were filed last week. That was a sizable increase from the previous week’s revised 281,000 initial claims and indicates the employment sector weakened last week. That is good news for the bond market and mortgage rates, but considering this is only a weekly figure and there was a significant holiday in that period, the impact this news has had on today’s markets is fairly minimal.
The bond market will close at 2:00 PM ET today ahead of the New Year’s Day holiday, but the stock markets are scheduled to be open for a full day of trading. All banks and major U.S. financial markets will be closed tomorrow for the holiday and will reopen Friday morning for regular hours. Due to the early close this afternoon, I would not be surprised to see bonds get a little active with lighter than normal volume and year-end position trades being made. That doesn’t mean we are in store for a noticeable change in mortgage rates later today. It simply means we could see a slight revision if the markets do move.
After the holiday, the Institute for Supply Management (ISM) will post their manufacturing index for December at 10:00 AM ET Friday morning. This highly important index measures manufacturer sentiment. A reading above 50 means that more surveyed manufacturing executives felt that business improved during the month than those who felt it had worsened. That indicates manufacturing sector strength rather than contraction. Analysts are currently expecting to see a 57.5 reading in this month’s release, meaning that sentiment softened from November’s 58.7. A smaller reading will be good news for the bond market and mortgage shoppers, while a higher than expected reading could lead to an increase in mortgage rates Friday morning as it would point towards a stronger manufacturing sector.