Mel's Blog

October 09 Market News #6

October 22nd, 2009 2:23 PM by Mel Samick

Thursday's bond market has opened in negative territory again as traders still wait for direction on the stock markets. Stocks are closed up with the Dow up 131 points and the Nasdaq up 14.56 points. The bond market is currently up 6/32, we will likely see an improvement in mortgage rates today.

Neither of today's economic releases were considered to be highly important. The Labor Department gave us favorable news with an announcement that 531,000 new claims for unemployment benefits were filed last week. This was higher than expected, indicating that the employment sector may be weakening. However, this data usually has little influence on mortgage rates unless it varies greatly from forecasts because it tracks a week's worth of new claims.

Late this morning the Conference Board, who is a New York-based business research group, said that their Leading Economic Indicators (LEI) rose 1.0% last month. This was a larger jump than what analysts had expected, meaning that economic activity may increase over the next three to six months at a faster pace than many had thought. This is negative news for bonds and mortgage rates because rapid economic growth raises fears of inflation that makes long-term securities such as mortgage-related bonds less attractive to investors.

Yesterday afternoon's release of the Fed Beige Book didn't give us any significant surprises. It pointed towards a stabilizing economy in most regions and slight growth in some, which was the general consensus anyhow. This made it a non-factor on mortgage rates late yesterday.

September's Existing Home Sales will be posted late tomorrow morning. This National Association of Realtors report gives us an indication of housing sector strength and mortgage credit demand by tracking home resales. It likely will have little influence on the bond market or mortgage rates unless its results vary greatly from analysts' forecasts. It is expected to show an increase in sales from August to September, meaning that the housing sector likely strengthened.

                   Mel

Posted in:General
Posted by Mel Samick on October 22nd, 2009 2:23 PM

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