Thursday’s bond market has opened in negative territory following another round of mixed economic news and an uneventful opening in stocks. The Dow has gained 7 points while the Nasdaq has slipped 6 points. The bond market is currently down 10/32, which will likely push this morning’s mortgage rates higher by approximately .125 of a discount point.

The first of today’s four monthly economic reports was November’s Personal Income and Outlays data. It showed that personal income rose 0.3% and that personal spending rose 0.4% last month. The income reading exceeded forecasts, meaning consumers had more money to spend last month than was thought. That was the negative portion of the report. The good news was the spending reading fell short of expectations, indicating consumers were spending less than what analysts had predicted. Since consumer spending makes up two-thirds of the U.S. economy, bond traders prefer to see slower rates of spen ding.

November’s Durable Goods Orders was also posted early this morning, revealing a 1.3% decline in new orders for big-ticket products. This was a slightly larger drop than expected and hints at manufacturing sector weakness, which can be considered good news. However, this data is so volatile from month to month that the 0.2% difference between forecasted and actual results is not enough to sway trading. In fact, a secondary reading within the report that excludes more volatile transportation-related orders showed a 2.4% increase that greatly exceeded forecasts. Therefore, this report can be label neutral-to-slightly negative for mortgage rates.

The University of Michigan’s Index of Consumer Sentiment was this morning’s third monthly release. It showed a reading of 74.5 that came in slightly short of expectations, meaning consumer confidence may not have been as strong as thought during the month. This is basically good news for the bond market because the higher the level of confidence a consumer has in their own financial situation, the more likely they are to make large purchases in the near future. But, this was an increase from the preliminary reading and the highest reading since June. That means that while this month’s final reading fell short of analysts’ forecasts, we are still seeing rising levels of confidence in consumers. This is data that we need to watch closely over the next couple of months.

The last report of the week was November’s New Home Sales data. It revealed a 5.5% increase in purchases of newly constructed homes, but fell short of what many had called for. In addition, a downward revision to October’s numbers pushed sales back nearly to their lowest level on record. This is good news for the bond market because a weak housing sector makes a broader economic recovery difficult.

Also worth noting were t he weekly unemployment figures from the Labor Department. They said that 420,000 new claims for unemployment benefits were filed last week. This was a small decline from the previous week and slightly fewer than what analysts had predicted, but the data has not had much of an impact on the bond market or mortgage rates this morning.

The stock and bond markets will close early today and remain closed tomorrow in observance of the Christmas Day holiday. This should not be of much concern to mortgage shoppers as any noticeable movement in rates as a result of this morning’s data would like have already taken place. However, it is common to see some movement in bond prices as investors move to protect themselves over the long holiday weekend. If there is a change coming in today’s rates, it will likely be posted early afternoon.

There will be no update to this report tomorrow.  We would like to take this opportunity to wish you and yours a happy and safe holiday season!