MARKET NEWS
Thursday's bond market has opened in positive territory following a mixed bag of economic news. The stock markets are in positive territory also, posting minor gains. The Dow is currently up 28 points while the Nasdaq has gained 13 points. The bond market is currently up 12/32, which should improve this morning's mortgage pricing by approximately .125 of a discount point. Limiting this morning's improvement was weakness in bond late yesterday that caused some lenders to revise pricing higher intra-day.

There were four pieces of economic data posted this morning. The first was weekly unemployment figures from the Labor Department, who announced that 364,000 new claims for unemployment benefits were filed last week. This was well below forecasts of 380,000 and a decline from the previous week's revised total of 388,000. These numbers point towards a strengthening employment sector, making them negative for bonds and mortgage rates.

The second early morning release gave us a bit of news that was favorable for bonds and mortgage pricing. That would be the final revision to the 3rd Quarter Gross Domestic Product (GDP). This morning's revision showed that the GDP grew at a 1.8% annual rate, which was lower than the previous estimate and forecasts of 2.0%. That means the economy grew at a slower pace during the third quarter than many had thought. Since bonds become more appealing in weaker economic conditions, this data was good news for mortgage rates. However, due to the age of this data, it does not carry a high level of importance and has had a minimal impact on trading and mortgage rates this morning.

December's revised University of Michigan Index of Consumer Sentiment was released late this morning, revealing a higher than expected reading of 69.9. Analysts were calling for a reading in the neighborhood of 68.0, indicating that surveyed consumers were more confident about their own financial situations than previously thought. This is negative news for the bond market because rising confidence means consumers are more apt to make large purchases in the near future, effectively fueling economic growth.

The last economic report of the day was the Conference Board's Leading Economic Indicators (LEI) for November at 10:00 AM ET. It came in with an increase of 0.5% that was stronger than the 0.3% that was forecasted. Since this data attempts to predict economic activity over the next three to six months, we should consider this report negative for bonds and mortgage rates also.

Overall, this morning's data wasn't exactly good news for mortgage rates. A majority of the data that was posted pointed towards a strengthening economy. However, none of this morning's releases were considered highly important to the markets. That has allowed bonds to move higher despite their results, partly due to thin trading in a holiday week. On the other hand, if some of the more important reports we get each month or quarter show similar results in the coming weeks, we could see a much different reaction in the bond market and on rate sheets.

The week closes tomorrow with three relevant economic reports, two of which are considered fairly important. The first is November's Personal Income and Outlays data at 8:30 AM ET. It will give us an important measurement of consumer ability to spend and current spending habits. Since consumer spending makes up two-thirds of the U.S. economy, any related data usually has a noticeable impact on the financial markets and mortgage rates. Current forecasts are calling for a 0.2% increase in income and a 0.3% increase in spending. If this report reveals weaker than expected readings, we should see the bond market improve and mortgage rates drop slightly tomorrow morning. Stronger than expected readings will likely lead to bond losses and an increase in mortgage pricing.

November's Durable Goods Orders is next, also being posted early tomorrow morning. This data gives us an important measurement of manufacturing sector strength by tracking orders for big-ticket items or products that are expected to last at least three years. Analysts are expecting the report to show a 2.0% rise in new orders. A smaller increase in orders would indicate that the manufacturing sector was weaker than many had thought. This would be good news for the bond market and should drive mortgage rates lower. However, a larger jump in orders could lead to mortgage rates moving higher early tomorrow morning. This data is known to be quite volatile from month-to-month, so it is not unusual to see large headline numbers on this report.

The last report of the week is November's New Home Sales data. This report gives is a small reading of housing sector strength by tracking sales of newly constructed homes. They make up a small portion of all home sales compared to yesterday's Existing Home Sales report. Therefore, its impact on the markets is usually fairly minimal unless it shows a large variance from forecasts. However, Tuesday's Housing Starts that tracks construction of new housing was not expected to cause much fanfare in the markets. But the surprise jump in starts fueled a stock rally Tuesday, so it will be interesting to see just how much of an impact tomorrow's data will have.

Also worth noting is an early close in the bond market tomorrow ahead of the Christmas holiday this weekend. The bond market will close at 2:00 PM ET, but the stock markets will be open for a full day of trading. Although many traders will be home for the holiday, so we will likely see very thin volume in trading. That could lead to a larger than usual reaction to the day's economic reports or other relevant events. And all the markets will be closed Monday in observance of the holiday, reopening Tuesday morning.