Mel's Blog

Thursday's bond market has opened in negative territory as yesterday's afternoon weakness continues into this morning's trading. The stock markets are showing gains with the Dow up 64 points and the Nasdaq up 3 points. The bond market is currently down 97 basis points, which will likely push this morning's mortgage rates higher. The Labor Department reported early this morning that 608,000 new claims for unemployment benefits were filed last week. This was slightly higher than what analysts had expected, but not enough of a difference to have much influence on mortgage pricing. The Conference Board gave us today's second piece of news with the release of its Leading Economic Indicators (LEI) for May. It revealed a 1.2% increase that exceeded forecasts and points towards a sharp increase in economic activity over the next three to six months. This is bad news for bonds because strengthening economic activity makes bonds less appealing to investors and leads to higher mortgage rates. Yesterday's morning rally in bonds was short-lived as trading turned sour as the day went on. What looked like a potentially wonderful day for mortgage shoppers ended up being a bad day. A combination of a couple of factors led to the selling, including a weakening dollar that makes U.S. securities less valuable to international investors. The negative tone has carried into this morning's trading and with no important economic data this afternoon or tomorrow to stop the selling, we may see mortgage rates revise higher this afternoon and possibly tomorrow.