Wednesday’s bond market has opened flat with today’s only relevant economic data showing stronger than expected results. The stock markets are showing minor gains with the Dow up 4 points and the Nasdaq up 29 points. The bond market is currently nearly unchanged from yesterday’s close (1.79%), but we will likely still see an increase in this morning’s mortgage rates of approximately .125 of a discount if comparing to yesterday early pricing due to weakness in afternoon trading.
The Commerce Department said that new housing construction starts rose 4.4% last month, exceeding forecasts. That makes the data technically negative for the bond and mortgage markets, but this report is not considered to be highly important and the variance from expectations was not significant. Therefore, the net impact this news had on this morning’s rates was minimal.
Also worth mentioning today are rumors that the European Central Bank (ECB) already has decided what action they will take to boost economic activity in the Euro region. Supposedly they are going to start buying 50 billion euros worth of bonds per month starting in March. The rumor has the program expected to continue until the end of 2016. This move was widely expected in the global markets, but there has been some debate about the size of the campaign and the monthly purchase amount. Keep in mind that this is just a rumor at this time and will not be confirmed until early tomorrow morning our time when the official announcement is released.
The only economic data being posted tomorrow that has the potential to affect mortgage rates is last week’s unemployment numbers at 8:30 AM ET. They are expected to show that 302,000 new claims for unemployment benefits were filed last week, down from the previous week’s 316,000 initial claims. Rising initial claims indicates employment sector weakness, so the higher the number the better the news it is for bonds and mortgage rates. Although, because this is only a weekly snapshot, it usually does not cause much movement in mortgage pricing unless it shows a significant variance from forecasts.