Daily Market Commentary
Updated on March 31, 2023 10:09:36 AM EDT Friday’s bond market has opened in positive territory following favorable economic headlines. Stocks are looking to end the week on a positive note, pushing the Dow higher by 176 points and the Nasdaq up 66 points. The bond market is currently up 7/32 (3.52%), which should keep this morning’s mortgage pricing very close to Thursday’s early rates.
The first of this morning’s two economic releases was February's Personal Income and Outlays report at 8:30 AM ET. It revealed income and spending were inline with expectations. Income pegged forecasts at up 0.3% while spending rose 0.2%, falling just short of the predicted 0.3%. The good news came in the core PCE inflation index within the data that rose 0.3% when it was expected to rise 0.4%. Not only did the monthly rate come in lower than expected, but the year over year number also fell below January’s level, hinting that inflation is easing (albeit very slowly). Since this index is the Fed’s preferred inflation reading and waning inflation makes bonds more attractive to investors, we can consider the report to be favorable for mortgage rates.
March’s revised Consumer Sentiment Index was today’s late morning release. The University of Michigan announced a reading of 62.0 that was lower than the initial reading of 63.4 from two weeks ago. A decline in this index means surveyed consumers felt less optimistic about their own financial situations than previously. Analysts believe waning confidence translates into softer levels of consumer spending that makes up a huge part of the U.S. economy. As a sign of economic weakness, we can label the report good news for mortgage rates.
Next week has plenty scheduled with the potential to move mortgage rates. The week starts with one of the new month’s highly important reports and closes with another. We will get March’s Institute for Supply Management’s (ISM) manufacturing index late Monday while the calendar ends Friday when the almighty Employment report is posted. The bond market will only close early Friday for the Good Friday holiday, instead of a full closure, due to the importance of the monthly Employment report. Look for details on all of next week’s activities in Sunday evening’s weekly preview.
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