Thursday’s bond market has opened in negative territory, giving back a good portion of yesterday’s gains. Stock are also in selling mode with the Dow down 109 points and the Nasdaq down 86 points. The bond market is currently down 9/32 (2.15%), which should push this morning’s mortgage rates higher by approximately .125 - .250 of a discount point if comparing to Wednesday’s morning pricing. Some lenders may have revised upward late yesterday, meaning you may see a smaller increase this morning if yours did revise intraday.
Last week's unemployment figures were posted at 8:30 AM ET this morning. They showed that 237,000 new claims for unemployment benefits were filed last week, down from the previous week’s 245,000 initial filings. Analysts were expecting to see 240,000, meaning the employment sector was a bit stronger than expected last week. That makes the data negative for bonds and mortgage rates, although this report doesn’t carry enough significance to be the cause of this morning’s selling.
The second release of the day was May's Industrial Production data at 9:15 AM ET. It revealed no change in output at U.S. factories, mines and utilities. This matched forecasts, making the data neutral for mortgage rates. Ideally, a decline would have been good news, but the fact that there was no increase in production is somewhat favorable news.
The week closes with two more economic reports tomorrow morning. May's Housing Starts at 8:30 AM ET is the first. It tracks groundbreakings of new home projects, but is not considered to be of high importance. This means it likely will not affect mortgage rates unless its results vary greatly from forecasts. Market analysts are expecting to see an increase in starts of new homes last month. Good news for the bond market and mortgage rates would be a good-sized decline because a weakening housing sector makes broader economic growth less likely.
June's preliminary reading to the University of Michigan's Index of Consumer Sentiment will be posted late tomorrow morning. This index measures consumer willingness to spend and usually has a minor to moderate impact on the financial markets. It is expected to show a reading of 97.0, which would be a slight decline from May's 97.1. A smaller than expected reading would be considered good news for bonds because it would mean that surveyed consumers were less optimistic about their own financial and employment situations than thought. That often means they are less likely to make large purchases in the near future, but since this report is only moderately important it likely will not influence mortgage rates considerably unless it shows a significant variance from forecasts.