Wednesday’s bond market has opened well in positive territory following two favorable economic releases and early stock selling. The major stock indexes are posting sizable losses with the Dow down 141 points and the Nasdaq down 44 points. The bond market is currently up 19/32 (1.86%), which should improve this morning’s mortgage rates by approximately .250 of a discount point.
The first of this morning’s two reports was March’s ADP Employment report at 8:15 AM ET that showed 189,000 new private sector jobs were added during the month. This was well below forecasts of 225,000, giving an indication that the private-sector part of the labor market was weaker than many had thought. That is very good news for bonds and mortgage rates, as long as Friday’s governmental Employment report does not contradict these results. In the meantime, bonds have reacted favorably to the data.
Late this morning, we got the Institute for Supply Management’s (ISM) manufacturing index that gives us business condition sentiment in the manufacturing sector. It came in at 51.5, falling short of the 52.5 that was expected. This means that fewer surveyed executives felt business improved last month than did in February. That is a sign of slowing manufacturing activity, making the data good news for bonds and mortgage rates.
Tomorrow also has two pieces of economic data set for release, but neither of these are likely to cause as much movement in the markets that today’s reports did. The first will be last week’s unemployment figures at 8:30 AM ET. They are expected to show that 285,000 new claims for unemployment benefits were filed, up a little form the previous week’s 282,000. Rising claims is a sign of a softening employment sector, so the higher the number of new claims, the better the news it is for mortgage rates.
February’s Factory Orders will be released at 10:00 AM ET tomorrow morning. This data is similar to last week’s Durable Goods Orders report, except it includes orders for both durable and non-durable goods, giving us another measurement of manufacturing sector strength. It is considered to be only moderately important to the bond and mortgage markets, so unless it varies greatly from forecasts of a 0.5% decline, I suspect that the data will have a minimal impact on tomorrow’s mortgage rates.