Wednesday’s bond market has opened in positive territory despite a calm open in stocks and no relevant news or data to drive trading today. Stocks are mixed during early trading with the Dow up 21 points and the Nasdaq down 4 points. The bond market is currently up 9/32 (2.03%), which should improve this morning’s mortgage rates slightly.
Tomorrow has three pieces of data scheduled for release, but none of them are expected to draw too much attention. The first is last week’s unemployment figures at 8:30 AM ET. They are expected to show that 265,000 new claims for unemployment benefits were filed last week. This would be an increase from the previous week’s 255,000 initial filings, indicating that the employment sector softened last week. Because rising claims hints at a weakening employment sector, the higher the number of new filings the better the news it is for mortgage rates. However, since this is only a weekly snapshot it usually takes a wide variance from forecasts for the report to cause a noticeable move in mortgage pricing.
The National Association of Realtors will post September’s Existing Home Sales data at 10:00 AM ET tomorrow. This report gives us an indication of housing sector strength and mortgage credit demand by tracking home resales in the U.S. I don’t see it having much of an influence on the bond market or mortgage rates, but a reading that varies greatly from analysts’ forecasts could lead to a slight change in mortgage pricing. It is expected to show a small increase in sales from August to September, meaning the housing sector strengthened slightly. That would be bad news for the bond market since a strengthening housing sector makes broader economic growth more likely and bonds less appealing to investors.
September’s Leading Economic Indicators (LEI) will be released by the Conference Board at 10:00 AM ET tomorrow. This index attempts to measure future economic activity, particularly during the next three to six months. Current forecasts are calling for a decline of 0.1% from August’s reading. This would indicate that economic activity is likely to remain fairly flat over the next couple of months. That would be relatively favorable news for the bond market and mortgage rates, but this report is considered to be only moderately important. Therefore, a small increase or decline would not be of much concern to the bond and mortgage markets. Ideally, we would like to see a sizable decline though.