Market Commentary

Updated on May 8, 2025 10:11:30 AM EDT

The first of this morning's two moderately important economic releases showed 228,000 new claims for unemployment benefits were made last week, down from the previous week's 241,000 initial filings. This was a smaller decline than analysts were expecting. Forecasts had the number a little above 230,000. Declining claims are a sign of strength in the employment sector, making the data bad news for bonds and mortgage pricing.

Also at 8:30 AM ET was the 1st Quarter Productivity and Costs report. It revealed worker productivity fell at a 0.8% annual pace while labor costs rose 5.7%. A slower rate of productivity is bad news for bonds, as is quickly rising labor costs. Productivity was expected to have declined 0.4% and the labor costs reading was predicted to rise 5.0%. Accordingly, both readings are unfavorable for bonds and mortgage rates.

There also is a 30-year Treasury Bond auction happening today with results due to be announced at 1:00 PM ET. If they indicate there was a strong demand for the securities, we could see afternoon gains in bonds that may lead to a slight improvement in mortgage pricing before the end of the day. Tuesday's 10-year Note sale went well enough to leave us optimistic about today's auction. However, a weak sale may cause bond prices to fall, followed by an upward revision to mortgage rates.

Tomorrow lacks any relevant economic releases that we need to be concerned about. In the absence of data, there is a slew of Fed-member speaking engagements scheduled for tomorrow. The list shows at least nine different events where a member of the Federal Reserve is either the sole speaker or participating in a group discussion. Most of the event topics appear to be fairly mundane, but one or more of these events may yield a surprise tidbit that is relevant to factors currently driving the markets, such as inflation, tariffs and the slowing economy. We are not expecting any major news to come tomorrow, but the potential does exist for a reaction, especially when there is no economic data for traders to focus on.

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