Friday’s bond market has opened in positive territory following mixed economic data and early weakness in stocks. The major stock indexes are showing moderate losses with the Dow down 41 points and the Nasdaq down 22 points. The bond market is currently up 13/32 (2.18%), which should improve this morning’s mortgage rates by approximately .125 of a discount point
This morning had two pieces of relevant economic data released. The Labor Department’s Producer Price Index (PPI) for August was posted at 8:30 AM ET. It showed no change in the overall reading and a 0.3% rise in the core data that excludes more volatile food and energy prices. Both readings exceeded forecasts, indicating that inflationary pressures at the producer level of the economy were stronger than thought, making the data bad news for bonds and mortgage rates.
The University of Michigan posted their Index of Consumer Sentiment for September just before 10:00 AM ET. It came in at 85.7, falling well short of the 91.5 that was forecasted. This means surveyed consumers were less optimistic about their own financial and employment situations than many had thought. Because waning confidence usually translates into weaker levels of consumer spending, we can consider this data good news for mortgage rates.
Next week is very busy in terms of reports and other events that may influence mortgage rates. In fact, it likely will be an extremely active week for the financial and mortgage markets. There is nothing scheduled for Monday, but the rest of the week’s events include a very important consumer spending report and key inflation reading in addition to the long-sought FOMC meeting that some analysts believe will bring an increase to the Fed’s short-term interest rates. Look for details on next week’s activities in Sunday evening’s weekly preview.