Thursday's bond market has up sharply, continuing yesterday's late rally. The stock markets are also in positive territory with the Dow up 56 points and the Nasdaq up 11 points. The bond market is currently up 27/32, which should improve this morning's mortgage rates by approximately .250 of a discount point.

The only economic news posted this morning were the weekly unemployment figures from the Labor Department. They said that 365,000 new claims for benefits were filed last week. This was a smaller number than was expected, but fortunately has not affected bond prices or mortgage rates.

Yesterday's 10-year Note auction was not met with a very good demand. Despite this we saw bond prices rise during afternoon trading as the stock markets faltered. This is a sign that funds were being shifted from stocks into bonds, which may indicate an expectation of weakness in stocks. If the major stock indexes do begin to fall, we should see bonds benefi t and mortgage rates move lower.

Today's 30-year Bond sale could very well have the same result as yesterday's auction did. However, it appears that investors may not be so quick to react to its results. With no important economic data on tap tomorrow, we could see further gains in bonds, especially if stocks turn south.

March's Goods and Services Trade Balance report will be released early tomorrow morning. This report gives us the size of the U.S. trade deficit but likely will not have much of an impact on the bond market or mortgage pricing. It is expected to show a $61.3 billion trade deficit.