Thursday’s bond market has opened down sharply following stronger than expected inflation news and a sizable rebound in stock prices. The stock markets are recovering a good portion of yesterday’s losses with the Dow currently up 148 points and the 38 points. The bond market is currently down 27/32, which should push this morning’s mortgage rates slightly higher than yesterday’s pricing. Preventing a noticeable increase in rates was strength yesterday afternoon that came when stock prices moved lower than their morning losses. Without yesterday’s afternoon improvement, we would have seen mortgage rates higher this morning.
The Labor Department reported early this morning that the Consumer Price Index (CPI) 0.5% last month while the more important core data rose 0.2%. Both of these readings were slightly higher than forecasts, meaning inflationary pressures at the consumer level of the economy were stronger than many had thought. That is bad news for the bond market and mortgage rates because rising inflation makes long-term securities less attractive to investors.
The Labor Department also gave us last week’s unemployment figures, announcing that 385,000 new claims for unemployment benefits were filed last week. This nearly matched forecasts, and since it tracks only a week’s worth of new claims, it has not influenced this morning’s rates.
February’s Industrial Production report was also released this morning, showing a 0.1% decline in output at U.S. factories, mines and utilities last month. That was well below forecasts of a 0.6% increase, but a 0.4% upward revision to January’s data offset the favorable part of the release. Besides, the CPI is of much more concern to the bond market and mortgage rates than the production data is.
The Conference Board said late this morning that February’s Leading Economic Indicators (LEI) rose 0.8%. This was slightly lower than forecasts of a 1.0% increase, making it favorable for the bond market. However, it still showed a sizable increase and is not considered to be one of the more important reports we see each month. Therefore, its’ impact on this morning’s bond trading and mortgage pricing has been minimal.
There is nothing of importance scheduled to be released tomorrow. It is a fairly important day for the stock markets because tomorrow is known as Quadruple Witching day. This has to do with expiration of stock options and sometimes creates additional volatility in stocks as the options are executed before becoming worthless. I mentioned this because we have seen so much volatility in the stock markets recently that anything that will contribute to it may end up affecting bond prices and mortgage rates also. If the stock markets post another round of gains tomorrow, we will likely see more bond weakness and higher mortgage rates.
Thursday’s Mortgage Update
Thursday’s bond market has opened down sharply following stronger than expected inflation news and a sizable rebound in stock prices. The stock markets are recovering a good portion of yesterday’s losses with the Dow currently up 148 points and the 38 points. The bond market is currently down 27/32, which should push this morning’s mortgage rates slightly higher than yesterday’s pricing. Preventing a noticeable increase in rates was strength yesterday afternoon that came when stock prices moved lower than their morning losses. Without yesterday’s afternoon improvement, we would have seen mortgage rates higher this morning.
The Labor Department reported early this morning that the Consumer Price Index (CPI) 0.5% last month while the more important core data rose 0.2%. Both of these readings were slightly higher than forecasts, meaning inflationary pressures at the consumer level of the economy were stronger than many had thought. That is bad news for the bond market and mortgage rates because rising inflation makes long-term securities less attractive to investors.
The Labor Department also gave us last week’s unemployment figures, announcing that 385,000 new claims for unemployment benefits were filed last week. This nearly matched forecasts, and since it tracks only a week’s worth of new claims, it has not influenced this morning’s rates.
February’s Industrial Production report was also released this morning, showing a 0.1% decline in output at U.S. factories, mines and utilities last month. That was well below forecasts of a 0.6% increase, but a 0.4% upward revision to January’s data offset the favorable part of the release. Besides, the CPI is of much more concern to the bond market and mortgage rates than the production data is.
The Conference Board said late this morning that February’s Leading Economic Indicators (LEI) rose 0.8%. This was slightly lower than forecasts of a 1.0% increase, making it favorable for the bond market. However, it still showed a sizable increase and is not considered to be one of the more important reports we see each month. Therefore, its’ impact on this morning’s bond trading and mortgage pricing has been minimal.
There is nothing of importance scheduled to be released tomorrow. It is a fairly important day for the stock markets because tomorrow is known as Quadruple Witching day. This has to do with expiration of stock options and sometimes creates additional volatility in stocks as the options are executed before becoming worthless. I mentioned this because we have seen so much volatility in the stock markets recently that anything that will contribute to it may end up affecting bond prices and mortgage rates also. If the stock markets post another round of gains tomorrow, we will likely see more bond weakness and higher mortgage rates.