Thursday’s bond market has opened in positive territory to recover yesterday’s afternoon pre- and post-FOMC selling. Stocks are mixed this morning with the Dow up 397 points and the Nasdaq down 126 points. The bond market is currently up 9/32 (4.39%), which should bring mortgage rates back to Wednesday’s early pricing. If you saw an intraday increase yesterday, you likely will see an improvement this morning of approximately the same size.

This morning’s batch of economic news began with the 8:30 AM ET release of the initial Gross Domestic Product (GDP) reading from the first three months of the year. It revealed the U.S. economy grew at an annual pace of 2.0% despite the impact of the Iran war during March. Analysts were expecting it to be at a 2.1% rate, but it was still a strong rebound from the 4th quarter that was up only 0.5%. Technically speaking, the slower rate is good news for bonds. However, the fact that the growth rate was as high as it was could be a troubling sign for bonds when considering it happened during such turmoil in the energy markets. We are labeling the report neutral for mortgage rates.

March's Personal Income and Outlays report was also posted early this morning. The key readings in this report were the Personal Consumption Expenditures (PCE) indexes that the Fed relies heavily on during their monetary policy meetings. The overall PCE jumped 0.7% due to high oil and gas prices while the core PCE that excludes those items rose a more modest 0.3%. On an annual basis, the overall PCE rose from February’s 2.8% to 3.5% last month. The year-over-year core PCE went from 3.0% to 3.2% over that same period. All four readings literally pegged expectations. Higher inflation readings are almost always bad news for bonds and mortgage rates, even when they come as of no surprise to the markets.

The other headline numbers in this morning’s second report were the 0.3% rise in income and a 0.9% increase in spending. These numbers also nailed forecasts, preventing a negative response in the bond market. Accordingly, they had no impact on this morning’s mortgage rates.

Today’s third release was the 1st Quarter Employment Cost Index (ECI) that came in up 0.9%. An increase of that size means businesses paid moderately more for employee wages and benefits during the first three months. Rising wages are an inflation concern because employers will probably need to pass those higher costs into the pricing of their products and services. We haven’t seen much of a reaction to this data, partly because the other reports carry much more significance in the markets, but it still needs to be labeled as unfavorable for rates.

Finally, last week’s unemployment figures that were also released early this morning gave us a bit of a surprise. The weekly update showed only 189,000 new claims for jobless benefits were filed last week, down noticeably from the previous week’s revised 215,000 initial filings. More importantly, last week’s 189,000 were the fewest new claims since September of 1969. Since falling claims are a sign of strength in the employment sector, this report has to be labeled bad news also. Fortunately, it is just a weekly snapshot and doesn’t appear to be derailing this morning’s early bond momentum.

This week’s busy calendar ends late tomorrow morning when the Institute for Supply Management (ISM) announces their manufacturing index for April at 10:00 AM ET. This highly important report gives us insight into manufacturer sentiment on business conditions. A reading above 50 means that more surveyed trade executives felt business improved during the month than those who felt it had worsened, which is a sign of growth in the sector. Analysts are expecting to see a reading of 53.0, up from March's 52.7. Good news for mortgage rates would be a large decline from March's level, signaling manufacturing activity was weaker than thought during the month.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.