Friday’s bond market has opened in positive territory following mixed economic news and a mixed open in stocks. The Dow is currently down 79 points while the Nasdaq has gained 24 points. The bond market is currently up 4/32 (2.34%), which should improve this morning’s rates by approximately .125 of a discount point from yesterday’s morning pricing.
We had three pieces of relevant economic data posted this morning. The first gave us a very important consumer-level inflation reading at 8:30 AM ET. June’s Consumer Price Index (CPI) release showed a 0.3% increase in the overall reading a 0.2% rise in the more important core data that excludes volatile food and energy prices. Both readings matched forecasts, making the news neutral for the bond market and mortgage rates.
June’s Housing Starts report was second, also at 8:30 AM ET. The Commerce Department announced a 9.8% jump in new home groundbreakings, exceeding expectations by a pretty wide margin. This indicates that the new home portion of the housing sector was stronger than thought last month. Because that is a sign of economic strength, we can consider the data negative for mortgage rates. Fortunately though, this data is not considered to be highly important, minimizing its impact on today’s rates.
The University of Michigan’s Index of Consumer Sentiment closed out this week’s calendar just before 10:00 AM ET. It came in at 93.3 that was well below forecasts and a decline from June’s final reading of 96.1. Analysts were expecting to see 96.5, pointing towards strengthening consumer confidence. The decline means that surveyed consumers were less optimistic about their own financial and employment situations than analysts had thought. Since confidence levels are believed to track consumer spending activity, the decline is good news for the bond and mortgage markets.
Next week is very light in terms of relevant economic data scheduled for release or other planned events that may influence mortgage rates. There are only a couple of pieces of data set to be posted and none of them are considered to be highly important or key reports. The first report doesn’t come until mid-week. At the moment, it appears that next week should be fairly calm if comparing to recent weeks, but that could change quickly with significant movement in stocks or overseas news. Look for details on next week’s calendar in Sunday evening’s weekly preview.