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As predicted – home loan rates are on the rise and the stock market heads upward!
Thursday's bond market has opened well in negative territory after
stocks opened with strong gains again. The Dow is currently up 200 points
while the Nasdaq has gained 38 points. The bond market is currently down
22/32, but due to strength late yesterday we will likely see little change
in this morning's mortgage rates.
Today's minor economic data failed to show any significant surprises.
The Labor Department reported that 456,000 new claims for unemployment
benefits were filed last week. This was a little higher than expected, but
not enough to influence the markets or mortgage rates.
The second release of the morning was April's Goods and Services Trade
Balance report that revealed a $40.3 billion trade deficit. This was
smaller than expected, but since this data usually does not carry much
direct influence on mortgage rates, its impact has been minimal. It does
influence the value of the U.S. dollar versus other currencies, which makes
U.S. debt more or less attractive to overseas investors. However, the data
seldom leads to a noticeable change in mortgage rates.
Also worth noting is today's 30-year Bond auction. This sale is a
little less important to mortgage rates than yesterday's 10-year Note sale
was, but can influence bond trading and mortgage rates if it was met with a
particularly strong or weak demand from investors. Yesterday's sale showed
strong interest in some indicators but lackluster in others. Overall, it is
being considered an average auction. If today's sale follows suit, it
likely will not influence mortgage rates this afternoon.
Tomorrow morning brings us the release of the most important data of the
week when May's Retail Sales data is posted. This very important report
measures consumer spending, which is highly relevant to the bond market
because consumer spending makes up two-thirds of the U.S. economy. Analysts
are expecting to see that sales rose 0.2% last month. A smaller than
expected rise in sales would be good news for the bond market and could lead
to lower mortgage rates tomorrow.
The last report of the week is June's preliminary reading to the
University of Michigan Index of Consumer Sentiment late tomorrow morning.
This index measures consumer willingness to spend and usually has a moderate
impact on the financial markets. It is expected to show a reading of 74.5. A
smaller than expected reading would be considered good news for bonds, but
since this report is only moderately important it likely will not influence
mortgage rates considerably.
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