Daily Market Update

Updated on May 23, 2019 10:36:44 AM EDTSubscribe To Receive Daily Market Updates
Thursday’s bond market has opened well in positive territory due mostly to heavy selling in stocks. The stock markets are reacting to trade war concerns, pushing the Dow lower by 383 points while the Nasdaq has lost 123 points. The bond market is currently up 14/32 (2.33%), which should improve this morning’s mortgage rates by a little more than .125 of a discount point.

Yesterday afternoon’s release of the FOMC meeting minutes didn’t reveal any significant surprises. They showed that the Fed acknowledged inflation was running at a slower pace but that may be temporary. The discussion appeared to support a continued wait and see approach towards the economy and key short-term interest rates. There was also discussion of what to do with their current balance sheet, but none of this was a surprise. The bond market had little reaction to the release, making it a non-factor for mortgage rates.

This morning’s economic data hasn’t influenced bond trading or mortgage pricing. Both releases were considered minor and neither showed a significant variance from forecasts. Last week’s unemployment update showed that 211,000 new claims for unemployment benefits were filed last week, down a tad from the previous week’s 212,000 new filings. Analysts were expecting to see 218,000 new claims, so we can consider the data slightly negative for bonds.

April's New Home Sales report was posted at 10:00 AM ET this morning. The Commerce Department announced a 6.9% decline in sales of newly constructed homes. This was a larger drop than expected but the percentage is skewed by an upward revision to March’s sales. As with the early morning release, this data didn’t draw much of a reaction from the bond or mortgage markets.

Tomorrow brings us the week’s most important economic report at 8:30 AM ET. April's Durable Goods Orders will give us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket products. These are items made with an expected life span of three or more years such as airplanes, appliances and electronics. It is currently expected to show a decline in new orders of approximately 2.0%, hinting that the manufacturing sector weakened last month. That would be relatively good news for the bond market and mortgage rates, but this data is known to be quite volatile. Therefore, a small variance from forecasts will likely have little impact on mortgage rates. The larger the decline, the better the news it is for mortgage rates.


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