Thursday’s bond market has opened in negative territory, extending yesterday afternoon’s weakness. The stock markets are continuing their upward move with the Dow up 79 points and the Nasdaq up 22 points. The bond market is currently down 3/32 (2.63%), which should add another .125 of a discount point increase to yesterday’s upward revision in mortgage rates. All said, we should be seeing an increase of approximately .250 of a discount point from Wednesday’s morning pricing.
Today’s moderately important economic data gave us mixed results. The first report showed that 280,000 new claims for unemployment benefits were filed last week. This was a sizable drop from the previous week’s revised total of 316,000 new claims and well below forecasts of 305,000, indicating that the employment sector was stronger last week than many had thought. That makes the data bad news for bonds and mortgage rates, although the impact on this morning’s mortgage pricing has been fairly minimal because this is only a weekly release.
August’s Housing Starts was also released at 8:30 AM ET this morning, revealing a 14.4% decline in construction starts of new housing. That was a much larger drop than forecasts were calling for, meaning the new home portion of the housing sector weakened noticeably last month. It is worth noting that this number follows a sizable spike in July, so the large decline isn’t as surprising as it may seem. Still, it is favorable news for the bond and mortgage markets but doesn’t carry enough importance to fuel a bond rally.
Tomorrow will close out the week’s schedule with August’s Leading Economic Indicators (LEI) from the Conference Board at 10:00 AM ET. This moderately important index attempts to measure economic activity over the next three to six months. It is expected to show a 0.4% increase, meaning that it is predicting growth in economic activity over the next several months. A larger increase would be considered negative news for bonds and could lead to a minor increase in mortgage rates Friday.