Friday’s bond market has opened in negative territory as stocks show early strength. The Dow is currently up 159 points while the Nasdaq has gained 19 points. The bond market is currently down 18/32 (1.70%), which with the weakness that we saw late yesterday should push this morning’s mortgage rates higher by approximately .375 of a discount point compared to Thursday’s early rates.
The Commerce Department announced early this morning that consumer-level sales rose 0.2% last month, matching forecasts. An upward revision to December’s sales reverses the previously reported decline in spending. The report indicates consumers spent a little more than they did in December, but still within expectations. This data is relevant because consumer spending makes up over two-thirds of the U.S. economy. We can consider this particular report neutral to slightly negative for mortgage rates simply due to the upward revision in December’s sales.
We also got the University of Michigan’s Index of Consumer Sentiment for February late this morning. It came in at a lower than expected reading of 90.7. That means surveyed consumers were less optimistic about their own financial situations than January. That is good news for bonds because waning confidence usually translates into weaker levels of consumer spending and softer economic growth.
Next week has a handful of relevant economic reports scheduled for release in addition to the minutes from the most recent FOMC meeting. The markets are closed Monday in observance of the President’s Day holiday and none of the reports are set for release Tuesday. Look for details on next week’s events in Sunday evening’s weekly preview.