Daily Market Update

Daily Market Commentary Today's Commentary
Updated on October 18, 2018 10:33:21 AM EDT Thursday’s bond market has opened up slightly with stocks down again and no big surprises in today’s economic data. The major stock indexes are showing fairly heavy losses again, pushing the Dow lower by 127 points and the Nasdaq down 60 points. The bond market is currently up 2/32 (3.20%), but weakness in bonds late yesterday will prevent an improvement in today’s mortgage rates. As the bond market soured yesterday afternoon, many lenders revised rates higher intraday. Therefore, how much of an increase you will see this morning depends on their move yesterday afternoon. Today’s rates should be higher than Wednesday’s morning pricing by a little more than .125 of a discount point.

Yesterday’s release of the FOMC minutes didn’t reveal many surprises. This was expected because the last meeting was followed by updated economic projections and a press conference with Chairman Powell. One note worth mentioning is that its contents indicate a fourth rate hike this year, expected at December’s meeting, is all but guaranteed. The vote to raise rates the quarter point at that meeting was unanimous. The rest of the minutes were uneventful for the most part.

Last week’s unemployment figures were posted at 8:30 AM ET today, revealing 210,000 new claims for unemployment benefits were filed last week. This was a decline from the previous week’s revised 215,000 initial filings and weaker than the 212,000 that was expected. However, this is a very small variance in a weekly report, so it has had no impact on today’s mortgage rates.

September's Leading Economic Indicators (LEI) was the second report of the day. The Conference Board announced an increase of 0.5%, matching expectations. This index attempts to predict economic growth over the next several months. Therefore, weaker readings are considered good news for bonds and mortgage rates. But since it pegged forecasts, we have no seen much of a reaction to the news.

Tomorrow brings us one economic release worth watching. That would be September's Existing Home Sales data at 10:00 AM ET. This report will give us an indication of housing sector strength and mortgage credit demand by tracking home resales. It is expected to show a small decline in sales from August to September, meaning the housing sector was flat. That would be relatively good news for the bond market since a strengthening housing sector makes broader economic growth more likely and bonds less appealing to investors. Ideally, it would show a sizable decline in sales that points toward a weakening housing sector.


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