Market Commentary

Updated on March 30, 2023 10:07:53 AM EDT

The second update to the 4th Quarter Gross Domestic Product (GDP) was posted early this morning, revealing the economy grew at a 2.6% annual rate during the last three months of the year. This was a slight downward revision from the previous estimate, technically making the data good news for bonds and mortgage rates. However, since this data is so old at this point and we will get the current quarter’s numbers next month, today’s update has had no impact on this morning’s mortgage rates.

Also posted early this morning was last week’s unemployment figures that showed 198,000 new claims for benefits were filed. This was an increase from the previous week’s 191,000 initial filings, allowing us to label the report good news for rates. Unfortunately, being just a weekly snapshot, this data failed to have a noticeable influence on this morning’s mortgage pricing.

Tomorrow has two economic reports scheduled that should have a stronger impact on bond trading and mortgage rates than this morning’s data did. Februarys Personal Income and Outlays report will be first, coming at 8:30 AM ET. This data helps us measure consumers ability to spend and current spending habits. If income is rising, consumers are more likely to make additional purchases in the near future. Therefore, weaker than expected readings would be good news for bonds and mortgage rates. Also in this release is an important inflation index (PCE) that the Fed uses to gauge inflationary pressures. Forecasts are currently calling for a 0.3% rise in Februarys income and the same in spending. Analysts are predicting the core PCE index to rise 0.4%. The weaker the readings, the better the news it will be for mortgage rates.

The day’s second report comes from the University of Michigan at 10:00 AM ET. Their revised March Consumer Sentiment Index will give us an indication of consumer confidence. Rising confidence is considered bad news for the bond market and mortgage pricing because it usually means consumers are more willing to make large purchases. Tomorrows report is expected to show a reading of 63.4, unchanged from the preliminary estimate posted two weeks ago. Favorable results for bonds and mortgage rates would be a sizable decline in confidence.