Thursday’s bond market has opened in positive territory despite no significant economic news on tap today and a mixed open in stocks. The Dow is currently down 45 points while the Nasdaq is showing a 14 point gain. The bond market is currently up 4/32 (2.07%), which with yesterday’s afternoon strength should improve this morning’s mortgage rates by approximately .250 of a discount point if comparing to Wednesday’s morning pricing.
Yesterday’s afternoon bond rally coincided with the release of the minutes from the most recent FOMC meeting. The minutes indicated that more Fed members are concerned about raising key short-term interest rates too early because of economic issues overseas that may affect our growth here. That led many analysts to believe the first rate increase will come later than sooner. Because that signals the Fed is concerned about economic growth, it made bonds more attractive to investors.
There were two pieces of economic data posted this morning, but neither were considered highly important or had an influence on this morning’s mortgage rates. At 8:30 AM, we heard that 283,000 new claims for unemployment benefits were filed last week. This was a larger decline from the previous week’s 304,000 initial claims than analysts were expecting to see, meaning the employment sector was stronger last week than many had thought. That makes the data negative for bonds and mortgage rates. Fortunately though, this is only a weekly snapshot, so the impact on today’s rates has been minimal.
Also posted this morning was January’s Leading Economic Indicators (LEI) at 10:00 AM. The Conference Board announced a 0.2% rise in the indicators, meaning they are predicting modest economic growth over the next several months. This was slightly weaker than the 0.3% that was expected, but not enough of a variance to make a difference in today’s mortgage rates.
Tomorrow has nothing of relevance scheduled, so expect stock movement and overseas financial news, particularly regarding Greece, to be the biggest influence on bond trading and mortgage rates.