Thursday’s bond market initially opened relatively flat but has since slipped into negative territory. The stock markets are showing solid gains with the Dow up 163 points and the Nasdaq up 52 points. The bond market is currently down 6/32 (2.34%), but we will still see an improvement of approximately .250 of a discount point in this morning’s mortgage rates if comparing to yesterday’s early pricing. All of that improvement can be attributed to strength following Wednesday’s afternoon FOMC events.
May’s Consumer Price Index (CPI) was the first of today’s three economic reports. It showed that the overall CPI reading rose 0.4% while the core data rose 0.1%. Both readings were slightly softer than expectations (0.5% and 0.2%), indicating that inflationary pressures at the consumer level of the economy were not as strong as many had thought. That makes the data good news for bonds and mortgage rates because high levels of inflation causes bonds to be less appealing to investors.
Last week’s unemployment numbers were also posted early this morning. They revealed that 267,000 new claims for unemployment benefits were filed last week. This was a good sized decline from the previous week’s 279,000 initial claims and hints at a strengthening employment sector. Therefore, we should consider this data slightly negative for the bond market and mortgage rates.
The final report of the day and of the week was May’s Leading Economic Indicators (LEI) at 10:00 AM ET. The Conference Board announced a 0.7% rise, meaning the indicators are predicting stronger economic growth over the next several months. Analysts were expecting to see an increase of only 0.4%, so the stronger increase means the data is bad news for mortgage shoppers. Fortunately though, this particular report is not considered to be highly important, minimizing its impact on today’s rates.
There is nothing set for release tomorrow that is expected to influence mortgage rates. There are a couple of Fed member speeches late morning but they are nothing more than typical speaking engagements that have the potential to affect the markets but often cause little reaction. With nothing else to drive trading tomorrow, look for stock movement and these speeches to be the likely cause of any movement in mortgage pricing.