Thursday, September 23, 2010

Market UpDate

Thursday's bond market has opened in positive territory again despite some stronger than expected economic data. The stock markets mixed but calm with the Dow down 13 points and the Nasdaq up 9 points. The bond market is currently up 9/32, but we will likely still see a slight increase in this morning's mortgage rates due to some selling during late afternoon trading yesterday.

Two of today's three releases gave us stronger than expected results. The one that was favorable for bonds was last week's unemployment figures from the Labor Department. They reported that 465,000 new claims for unemployment benefits were filed last week. This was a noticeable increase when analysts were expecting a small decline in claims, indicating that the employment sector was weaker than thought last week. That is good news for the bond market and mortgage rates because unemployment has been a key issue regarding the economy. If it remains weak, a broader economic recovery is not likely.

The Conference Board posted their Leading Economic Indicators (LEI) for August late this morning. They announced a 0.3% increase in the index, meaning it is predicting a modest increase in economic activity over the next several months. Analysts had forecasted a 0.1% increase, so the stronger reading is considered negative for bonds. However, this is not a government agency report, so it is only moderately important to the markets. The size of the variance was not enough to cause much alarm in the bond market, preventing a negative reaction to the report.

August's Existing Home Sales report was the third report of the day. The National Association of Realtors reported that home resales rose 7.6% last month, exceeding forecasts. The markets were expecting to see a smaller increase in sales, which means that the housing sector was a little stronger than thought last month. That is also considered bad news for bonds and mortgage rates , however, this report is not considered to be highly important so its impact on bond trading and rates has been minimal...
Post a Comment