Thursday’s bond market has opened down slightly even though today’s only relevant economic data gave us favorable results. The major stock indexes are showing sizable gains that are pressuring bonds during morning trading. The Dow is currently up 166 points while the Nasdaq has gained 40 points. The bond market is currently down 2/32 (1.99%), which should keep this morning’s mortgage rates close to yesterday’s levels.
Today’s only data was last week’s unemployment figures that showed 293,000 new claims for unemployment benefits were filed last week. This was much higher than the 280,000 that was expected and a noticeable increase from last week’s revised total of 283,000 initial claims. The increase indicates that the employment sector was weaker week than many had thought, making the data good news for bonds and mortgage rates.
Tomorrow has two economic reports that we will be watching, both at 10:00 AM ET. December’s Existing Home Sales from the National Association of Realtors is one. This data will give us a measurement of housing sector strength and mortgage demand by tracking home resales in the U.S. It is expected to show a rise in sales from November’s level, meaning the housing sector strengthened last month. Ideally, bond traders would like to see a decline in sales that would point toward housing sector weakness because a weakening housing sector makes broader economic growth more difficult. However, as long we don’t see a significant surprise in its results, it shouldn’t have a noticeable impact on tomorrow’s mortgage pricing.
December’s Leading Economic Indicators (LEI) is the final report of the week. The Conference Board, who is a New York-based business research group compiles the data and releases this report. It attempts to predict economic activity over the next several months, but since it is posted by a non-governmental agency, it is not considered to be of high importance to the financial and mortgage markets. Tomorrow’s release is expected to show a 0.1% decline, meaning the indicators are predicting a slight easing in economic activity this spring. As long as we don’t see a much stronger than predicted increase, I don’t think this data will have much of an influence on mortgage pricing either.