Thursday’s bond market has opened in positive territory despite early strength in stocks. The major stock indexes are showing relatively minor gains with the Dow up 51 points and the Nasdaq up 26 points. The bond market is currently up 4/32 (2.35%), but due to weakness late yesterday we will likely see little change in this morning’s mortgage rates if comparing to yesterday’s morning pricing.
Today’s only relevant data was last week’s unemployment figures at 8:30 AM ET. They showed that 290,000 new claims for unemployment benefits were filed last week. This was an increase from the previous week’s 278,000 initial claims, making the data favorable for bonds and mortgage rates. Unfortunately, this is only a weekly report, so its impact on today’s bond trading and mortgage pricing has been fairly minimal.
Also worth noting is today’s 30-year Bond auction that has the potential to affect rates. Yesterday’s 10-year Note auction went poorly for the most part, giving us little to be optimistic about in today’s sale. If it was met with a strong demand from investors, we should see the bond market move higher during afternoon trading today. However, another weak interest would indicate a waning appetite for longer-term U.S. securities and could lead to broader bond selling. The selling in bonds will probably result in upward revisions to mortgage rates shortly after the results are posted at 1:00 PM ET.
Tomorrow morning has two economic reports set for release that are likely to affect mortgage rates. The first is October’s Retail Sales figures from the Commerce Department at 8:30 AM tomorrow. This data measures consumer level or retail spending. It is considered extremely important to the markets because consumer spending makes up over two-thirds of the U.S. economy. It is expected to show a 0.3% increase in retail-level spending, meaning consumers spent more last month than they did in September. A larger increase in spending would be considered negative news for bonds because rising spending fuels economic growth and raises inflation concerns in the bond market. If tomorrow’s report reveals a decline in spending that indicates consumers spent less than thought, bonds should react favorably, pushing mortgage rates lower. If it shows an unexpected increase, mortgage rates will likely move higher.
The week’s economic calendar closes late tomorrow morning when November’s preliminary reading of the University of Michigan’s Index of Consumer Sentiment is posted. This index measures consumer confidence, which gives us an indication of consumer willingness to spend. It is expected to show a reading of 87.5, up from October’s final reading of 86.9. That would be considered negative news for bonds because rising sentiment means consumers are more optimistic about their own financial situations and are more likely to make large purchases in the near future. And with consumer spending so important, any related data is watched closely. The lower the reading, the better the news it is for mortgage shoppers.