July 17th, 2009 9:46 AM by Mel Samick
Thursday's bond market has opened well in positive territory, recovering most of yesterday's losses. The stock markets are up, with the Dow up 95 points and the Nasdaq up 22 points. The bond market is currently up 53 basis points.The bond market had extended its losses during afternoon trading after the FOMC minutes indicated that Fed members think the recession should be ending soon. They expect that unemployment will still rise, possibly exceeding 10% this year. But they also revised their Gross Domestic Product (GDP) predictions upwards from previous forecasts. The GDP is the measure of all goods and services produced in the U.S., therefore, it is the benchmark reading for tracking economic activity. The unemployment rate revision was favorable to bonds, but the upward revision to GDP forecasts and other optimistic comments about the economy in the minutes led to more selling in bonds late yesterday. Today's only data were weekly unemployment figures from the Labor Department. They reported that 522,000 new claims for benefits were filed last week. This was lower than expected and the lowest total since early January. Fortunately for mortgage shoppers, this data has a minimal impact on trading and mortgage rates because it covers only a week's worth of claims.Tomorrow's only relevant data is June's Housing Starts report. This data gives us an indication of housing sector strength, but is not considered to be of high importance. Analysts are currently expecting to see little change in new starts of housing projects from May to June. However, I don't see this data having much of an impact on mortgage rates unless it varies greatly from forecasts.