Thursday’s bond market has opened in positive territory following favorable employment-related news. Stocks are showing early losses with the Dow down 66 points and the Nasdaq down 18 points. The bond market is currently up 6/32 (2.52%), which may improve this morning’s mortgage rates slightly.
Today’s only worthwhile economic data was last week’s unemployment figures. They were posted at 8:30 AM ET this morning, showing that 315,000 new claims for unemployment benefits were filed last week. This was a noticeable difference from the 300,000 that was expected and an increase from the previous week’s revised total of 304,000. Since rising claims hints at a softening employment sector, we can consider this morning’s news favorable for bonds and mortgage rates.
At 1:00 PM ET, we will get the results of today’s 30-year Bond auction. Yesterday’s 10-year Note sale wasn’t overly impressive nor was it weak. Several of the benchmarks we use to gauge investor demand showed an average level of interest or close to it. That doesn’t give us much to be optimistic about in today’s sale, but also doesn’t raise much concern either. A high level of interest in the securities should help boost the broader bond market and possibly lead to an improvement in mortgage rates during afternoon trading. However, a particularly lackluster sale could cause bonds to move lower and mortgage rates to revise higher.
Tomorrow morning brings us both of this week’s monthly economic reports. The highly important one is August’s Retail Sales at 8:30 AM ET. This Commerce Department report will give us a very important measurement of consumer spending that is extremely relevant to the markets because it makes up over two-thirds of the U.S. economy. Current forecasts are calling for a 0.6% increase in sales. Analysts are also calling for a 0.3% rise in sales if more volatile auto transactions are excluded. Larger than expected increases would be considered bad news for bonds and likely lead to an increase in mortgage pricing since it would indicate economic growth.
The final event of the week will be posted by the University of Michigan just before 10:00 AM ET tomorrow. Their Index of Consumer Sentiment will give us an indication of consumer confidence, which projects consumer willingness to spend. If a consumer’s confidence in their own financial situation is rising, they are more apt to make large purchases in the near future. But, if they are growing more concerned about their job security or finances, they probably will delay making that sizable purchase. This influences future consumer spending data and therefore, impacts the financial markets. It is expected to show a reading of 83.5 that would mean confidence rose from August’s level of 82.5. That would be considered slightly negative news for bonds and mortgage rates. Good news for mortgage shoppers would be a noticeable decline in the index.