Market Update

Friday’s bond market has opened flat following mixed economic news and early strength in stocks. The Dow is currently up 73 points while the Nasdaq has gained 24 points. The bond market is currently unchanged from yesterday’s closing level, but we will likely see an increase of approximately .125 – .250 of a discount point in this morning’s mortgage rates due to weakness late yesterday.
This morning’s first piece of economic data was the final revision to the 4th Quarter GDP. It came in at 3.1%, up from the previous estimate of 2.8% and higher than forecasts were calling for. This means that the economy grew at a faster pace in the 4th quarter than previously thought. That would be considered bad news for the bond market and mortgage rates, but since this data is quite aged now (3-6 months), its’ impact on this morning’s rates has been minimal. Investors and analysts are more concerned with current quarter numbers that will be posted next month.
The University of Michigan revised their Consumer Sentiment Index for March late this morning, announcing a reading of 67.5 that was a little lower than expected. That is favorable news for the bond market and mortgage rates because falling consumer confidence usually means consumers are less likely to make large purchases in the near future, helping to limit economic growth. However, this report is considered to be moderately important to the bond market and mortgage pricing, so this morning’s revision was not enough of a change to influence mortgage rates.
Next week is busy in terms of economic releases that are relevant to mortgage rates. There are several reports scheduled next week that have the potential to move the markets and change mortgage pricing, including the almighty monthly Employment report. There are also a couple of relevant Treasury auctions to watch. The data begins Monday with the release of February’s Personal Income and Outlays report that is expected to show moderate increases in both readings.