Market Commentary

Updated on September 21, 2023 10:04:49 AM EDT

The first of this morning’s three economic reports was last week’s unemployment figures. It showed that only 201,000 new claims for benefits were filed last week, touching their lowest since back in January. Analysts were expecting 220,000 new filings, pointing towards a strengthening employment sector. This makes the report bad news for bonds and mortgage rates.

Augusts Existing Home Sales report was released at 10:00 AM ET today, revealing a 0.7% decline in home resales last month. This was a larger decline than was expected, hinting at housing sector weakness. Since a softening housing sector makes broader economic growth more difficult, this is good news for mortgage rates. However, this report doesn’t carry enough significance to offset the overall negative tone in bonds currently.

Also posted late this morning was August’s Leading Economic Indicators (LEI). As expected, the Conference Board announced a 0.4% decline. This means the indicators are pointing towards slower economic activity over the next several months. Accordingly, we can label this report favorable for bonds and mortgage rates.

Tomorrow doesn’t have anything scheduled that we need to be concerned about. Now that the FOMC meeting is behind us, attention should be turning towards the upcoming budget showdown. There doesn’t appear to be much optimism that a government shutdown can be avoided at this point. That scenario is actually favorable for bonds, so as we get closer to the end of the month without progress on a continuing resolution (CR) to keep government operations running until a budget deal is reached, we should see bonds and mortgage rates benefit from the chaos in Washington DC.