Friday’s bond market has opened in positive territory with both of this morning’s economic reports showing favorable results. The stock markets are pretty calm with the Dow down 9 points and the Nasdaq down 2 points. The bond market is currently up 18/32 (2.17%), which should improve this morning’s mortgage rates by approximately .250 – .375 of a discount point over Thursday’s morning pricing.
The first of this morning’s two relevant pieces of data was April’s Industrial Production at 9:15 AM ET. It showed a 0.3% decline in output at U.S. factories, mines and utilities. This was well below forecasts of a 0.1% increase, hinting that the manufacturing sector may be weaker than many had thought. That makes the data good news for bonds and mortgage rates as bonds tend to thrive in weaker economic conditions.
May’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment was posted just before 10:00 AM ET, revealing a reading of 88.6 that also fell short of expectations. Analysts were expecting to see a reading of 96.0 that was close to April’s 95.9. The large drop indicates surveyed consumers were much less optimistic about their own financial and employment situations than they were last month. Because waning confidence usually means consumers are less likely to spend, limiting economic growth, we can consider this news quite favorable for mortgage shoppers.
Next week is not overly busy in terms of economic releases or other events that have the potential to influence mortgage rates. There are a couple of reports scheduled, including a highly important inflation reading and the minutes from the most recent FOMC meeting. None of them are scheduled for release Monday. Look for details on next week’s calendar in Sunday evening’s weekly preview.