Poor reads on housing and manufacturing helped mortgage rates move back to historic lows yesterday.  However as the day progressed mortgage-backed securities prices fell from their highs and some lenders were forced to reprice for the worse.  Rate sheet recalls were not broad based though.

We had only one economic report this morning: Weekly Jobless Claims.  Released by the Department of Labor, this report provides three timely metrics on the health of the labor market:

  • Initial Jobless Claims:  totals the number of Americans who filed for first time unemployment benefits in the previous week
  • Continued Claims:  totals the number of Americans who continue to file for benefits due to an inability to find a new job
  • Extended and Emergency Benefits: totals the number of Americans who have exhausted their traditional benefits and are now receiving extended and emergency benefits

Since our economy is driven by consumer spending, market participants track employment data to get a gauge on economic momentum.  Higher jobless claims imply less consumers have jobs and therefore less money to spend.  This is a negative for the overall economy but generally helpful in keeping consumer borrowing costs from rising.  Recent reports have shown jobless claims moving higher calling into question our economic recovery. 

Here are the results:

  • Initial Jobless Claims: -31,000 to 473,000 vs. estimates for a read of 490,000.  Prior week’s data was revised worse to show 4,000 more claims. 
  • Continued Claims: -62,000 to 4.456 million  vs. estimates of 4.50million. 
  • Extended and Emergency Benefits: +302,000 to 5.84million.

With the lion's share of recent economic reports coming in worse than expected,  the market was relieved by this better than expected data. 

Lender rate sheets are slightly worse than yesterday but nothing monumental.  The best par 30 year fixed -conventional, FHA and VA-  mortgage rate remain in the 4.25% to 4.50% range with several lenders offering 4.125%.  15 year fixed rate loans also remain in the 3.75% to 4.00% range.  

We have a couple economic reports tomorrow which have the potential to move the markets.  At 8:30am the first revision to second quarter GDP will print.  Economists forecast a downward revision from 2.4% to only 1.3%.  If that report comes in better than expected, rates will be pressured higher in the short term.  If worse than expected, rates should hold steady or maybe improve a little bit, but not much.  We also get Consumer Sentiment which is less influential than the GDP report but has the potential to move markets if the results are outside the range of economist estimates.

The most important event of the day will be a speech delivered by the Federal Reserve Chairman at 10:00am where he will share his economic outlook.  AQ wrote some thoughts on that event. READ MORE HERE.