Wednesday’s bond market has opened in positive territory despite a lack of factual economic data this morning. The stock markets are calm again with the Dow up 10 points and the Nasdaq nearly unchanged. The bond market is currently up 6/32 (2.27%), but due to weakness late yesterday, we likely will see little change in this morning’s mortgage rates if comparing to Tuesday’s morning pricing.
There is no relevant economic data being released today, but the markets are waiting for this afternoon’s release of the minutes from the last FOMC meeting. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation or concerns about economic growth. The goal is to form opinions about the Fed’s next move regarding interest rates, which is expected to happen sometime this year. Since the minutes will be released at 2:00 PM ET, if there is a market reaction to them it will be evident during afternoon trading.
Tomorrow has three reports being posted. The first will be at 8:30 AM when we will get last week’s unemployment update. This is when we will see last week’s unemployment filings. It is expected to show that 270,000 new claims for benefits were filed last week, up from the previous week’s 264,000 initial claims. Rising claims are an indication of a softening employment sector, so the higher the number of new claims the better the news it is for mortgage rates.
The National Association of Realtors will give us their Existing Home Sales report at 10:00 AM ET tomorrow This data tracks resales of existing homes in the U.S. during April, giving us a measurement of housing sector strength and mortgage credit demand. This type of data is relevant because a weakening housing sector makes broader economic growth less likely. Current forecasts are calling for a small increase in home sales between March and April. Ideally, the bond market would prefer to see a decline, indicating housing sector weakness. A large increase in sales could lead to bond weakness and a slight increase in mortgage rates Thursday morning since a strengthening housing sector raises optimism about general economic growth.
Lastly, April’s Leading Economic Indicators (LEI) will also be released at 10:00 AM ET. This Conference Board report attempts to predict economic activity over the next three to six months. It is expected to show a 0.3% increase from March’s reading, meaning that economic activity is likely to strengthen over the next few months. A decline would be good news for the bond market and mortgage rates, while a larger increase could cause mortgage rates to inch higher tomorrow.