Thursday Mortgage Interest Rate and Market Update

March durable goods orders blew the doors off at 8:30 this morning and sent MBS prices lower. Durables were widely thought to be up 2.0%, a solid number, as reported though orders jumped 2.6%; orders that exclude the volatile transportation orders were expected to have increased 0.9%, orders shot up 2.0%. The data was the strongest we have seen in months and has traders talking that manufacturing will now lead the economy higher. Durables are goods built to last three or more years. In Feb orders were also strong, +2.1%. The increase ex transportation orders is the biggest increase in more than a year.

Weekly jobless claims also at 8:30, were up 24K to 329K, consensus was for an increase of about 8K. The increase isn’t seen as a change in the decline of firings, but once again 300K didn’t break. Firings have slowed, which probably means employers are gaining confidence the world’s largest economy is strengthening. Markets essentially ignored the higher levels because spring holidays is hard to quantify from year to year, a Labor Department spokesman said as the figures were released to the press. Holidays such as Easter that occur during different weeks from one year to the next make it difficult for the Labor Department to adjust the data for these seasonal variations. There were no other special circumstances last week and no states were estimated. The four-week average of claims, a less-volatile measure than the weekly figure, climbed to 316,750 from 312,000 the week before, the lowest since 2007.

Wish I had something else to say about the bond and mortgage markets than what I have been saying for weeks. Interest rates are not changing and haven’t changed in three months. Geo-political concerns and concerns that the stock market may be moving to a correcting sell-off. Over the last three weeks nothing in the way of news or data has had any material effect on interest rates. It won’t last forever but in the near term there isn’t anything that will break the quiet interest rate markets as long as no declines in stocks and no increasing military actions in Ukraine.