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Market News

Market Commentary

Updated on May 25, 2022 10:06:37 AM EDT

April's Durable Goods Orders report was posted at 8:30 AM ET this morning. The Commerce Department announced a 0.4% rise in news orders for big-ticket products such as airplanes, appliances and electronics. This was a little softer than the 0.6% increase that was expected, but because this data is known to be quite volatile from month to month, the variance doesn't mean nearly as much as it would in other reports.

A secondary reading that excludes the more costly and volatile transportation orders (airplanes and related) also came in lower than predicted, indicating the manufacturing sector was not as strong as thought last month. These numbers allow us to consider the data slightly favorable for mortgage rates.

We also have the first of this week's two relevant Treasury auctions taking place today. 5-year Treasury Notes are being sold today, followed by 7-year Notes tomorrow. If today's sale draws a strong demand from investors, we may see bond prices rise this afternoon, possibly leading to a slight improvement in mortgage pricing. Results will be posted at 1:00 PM, making this an early afternoon event for rates.

Concluding today's activities will be the release of the minutes from the May 3-4 FOMC meeting at 2:00 PM ET. Market participants will be looking for how Fed members feel about inflation, the global economy and the size of future rate hikes. Because of recent public speaking engagements and such, we likely are not going to see too much in the minutes that we didn't already know. If there is a reaction, it will come during mid-afternoon trading.

The first revision to the 1st quarter Gross Domestic Product (GDP) reading will come early tomorrow morning. The GDP is the sum of all goods and services produced in the U.S. and is considered to be the best measurement of economic growth or contraction. Last month's preliminary reading revealed that the economy contracted at an annual rate of 1.4%. Analysts expect to see little change in this update. If the revision comes in stronger than the last estimate, we may see the bond market react negatively and mortgage rates move higher because it would mean the economy was doing better than thought. Since bonds tend to thrive in weaker economic conditions, a larger decline would be good news for mortgage rates.

Last week's unemployment figures will also be posted at 8:30 AM ET tomorrow, but they likely will not have much of an impact on rates. Forecasts show 210,000 new claims for benefits were filed last week, down from the previous week's 218,000. Favorable news for rates would be a large increase in new filings.

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