Wednesday’s bond market has opened flat despite the release of some favorable economic news. The stock markets are calm also with the Dow up 6 points and the Nasdaq down 3 points. The bond market is currently unchanged from yesterday’s close at 2.29%, but due to weakness during afternoon trading yesterday we should see an increase in this morning’s mortgage rates of approximately .125 of a discount point.
The first of today’s three relevant economic reports November’s ADP Employment report at 8:15 AM ET. It showed that 208,000 new private-sector jobs were added last month, falling a little short of the 225,000 that was expected. This indicates the private (non-governmental) part of the employment sector was not as strong as many had thought. It also gives some market participants concern that Friday’s big government-issued report may not be as strong as hoped. That remains to be seen, but the markets have not had much of a reaction to today’s news.
The second piece of data was the revised 3rd Quarter Productivity numbers at 8:30 AM ET that revealed worker output grew at a 2.3% annual pace during the quarter. This was a little stronger than the initial estimate of a 2.0% rate, but not enough of a difference to draw much attention. The report did show labor costs dropped 1.0% after initially showing no change. Therefore, we can consider the data slightly favorable for mortgage rates.
Later today, the Federal Reserve will post their Beige Book report that details economic conditions by Fed region. That information is relied upon heavily during the FOMC meetings when determining monetary policy, so its results can influence bond trading and mortgage rates if it shows any noticeable changes from the last update. More times than not though, this report will not influence the markets enough to cause intra-day changes to mortgage rates, but the potential to do so does exist. If there is a reaction to the release, it will come shortly after its 2.00 PM ET posting.
Tomorrow’s only semi-relevant data is last week’s unemployment figures at 8:30 AM ET. They are expected to show that 295,000 new claims for unemployment benefits were filed last week, down from the previous week’s 313,000. Since rising claims for unemployment benefits is a sign of a softening employment sector, the higher the total claims the better the news it is for the bond and mortgage markets. Negative news for rates would be a noticeable decline in initial claims.