On the data front weekly jobless claims fell below the 400,000 mark for the first time since early April. It will be nice to see the number continue to fall as higher employment will be the main driver of a recovery in housing. Regarding housing, the number of contracts to purchase previously owned U.S. home rose 2.4% in June as buyers tried to take advantage of lower prices and borrowing costs.
Wednesday’s 5 year note auction did not go as well as Tuesday’s 2 year auction and we saw bonds take a hit, especially mortgages which ended the day almost 50 basis points lower in price. This morning the bond market has recovered much of Wednesday’s losses, however, we still have the 7 year note auction scheduled for later today.
And of course, the main focus continues to be the drama surrounding an agreement on raising the U.S. borrowing capacity while trying to reign in uncontrolled spending. No deal is expected today, so bonds will most likely trade on the results of the 10 year note auction. If you need to lock your loan today, consider locking it early.
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