Friday’s bond market has opened in positive territory despite stronger than predicted economic news. The stock markets are showing minor losses but are calm with the Dow down 19 points and the Nasdaq down 2 points. The bond market is currently up 6/32 (2.01%), but due to weakness late yesterday we can expect this morning’s mortgage rates to be very close to yesterday’s early pricing. This morning’s early strength simply offsets that late weakness from yesterday.
The first of two revisions to the 4th Quarter GDP reading was posted early this morning, revealing that the economy grew at an annual rate of 2.2% during the last three months of last year. This was close to forecasts of a 2.1% rate but was a decline from the preliminary estimate of 2.6% that was issued last month. Since weaker economic conditions make bonds more attractive to investors, we can consider this news slightly positive for mortgage rates. The fact that it was not weaker than what was expected prevents it from clearly being good news.
Late this morning, the University of Michigan’s revised February Index of Consumer Sentiment was released. It showed a reading of 95.4 that exceeded forecasts and was an increase from the initial estimate of 93.6. That is bad news for the bond market because rising consumer sentiment about their financial and employment situations means they are more likely to make a large purchase in the near future. Since consumer spending makes up such a large portion of our economy, bond traders prefer to see weaker levels of confidence and spending. Fortunately, this is only a moderately important report that has not had a significant impact on this morning’s rates.
Next brings us another handful of relevant economic reports, but in that batch are a couple of extremely important releases that can be highly influential on the financial and mortgage markets. The week’s activities start Monday with January’s Personal Income and Outlays report in addition to February’s ISM manufacturing index. They end with the almighty monthly Employment report Friday. It appears we are going to see some movement in rates as the week opens and closes. In between is not as busy but still has enough scheduled to cause noticeable movement in mortgage pricing. Look for details on these and the rest of next week’s activities in Sunday evening’s weekly preview.