Santa Fe Las Campanas Stock/Bond Market Report

  Friday’s bond market has opened in positive territory following early stock losses. The stock markets are reacting negatively to rumors about a potential credit downgrade of multiple European countries that would threaten the global economy. The Dow is currently down 145 points while the Nasdaq has lost 30 points. The bond market is currently up 19/32, which should improve this morning’s mortgage rates by approximately .125 – .250 of a discount point. 
There were two economic reports posted this morning. The first came at 8:30 AM ET when November’s Goods and Services Trade Balance report was released. It revealed a much larger than expected trade deficit of $47.8 billion. However, the data did not draw any attention and has not influenced this morning’s mortgage rates.
Late this morning, we saw the preliminary reading to the University of Michigan’s Index of Consumer Sentiment for January. It showed a reading of 74.0 that was also well above forecasts. This means that surveyed consumers were more optimistic about their own financial situations than many had thought. This is clearly negative news for the bond market because rising confidence usually translates into higher levels of consumer spending and economic growth. Fortunately, the sizable stock losses are taking center stage this morning.
Next week has a handful of economic reports scheduled that may influence mortgage rates, including two key inflation indexes. The financial markets will be closed Monday in observance of the Martin Luther King holiday and will reopen Tuesday morning. The markets will be open for a full day of trading today (no early close ahead of the holiday).  I will not update my report Monday since the markets are closed and most mortgage lenders will follow suit. By Mark Woloshuk