Wednesday’s bond market has opened down slightly following stronger than predicted economic news. The major stock indexes are mixed with the Dow up 39 points and the Nasdaq down 15 points. The bond market is currently down 3/32 (1.86%), which should keep this morning’s mortgage rates close to yesterday’s morning pricing.
January’s ADP Employment report was today’s only relevant economic data. The 8:15 AM ET release showed an increase of 205,000 private sector jobs. This was higher than the 190,000 that was expected, hinting at a stronger than thought employment sector. While that is bad news for the bond and mortgage markets, the real measurement of sector strength will come Friday morning when the government-issued Employment report is released.
There are three pieces of economic data scheduled for release tomorrow morning, none of which are considered to be highly important. We start with last week’s unemployment figures at 8:30 AM ET. They are being forecasted to show that 275,000 new claims for unemployment benefits were filed last week. This would be a small decline from the previous week’s total of 278,000. Since rising claims is a sign of a weakening employment sector, a large increase in new claims would be good news for mortgage shoppers.
Employee Productivity and Costs data for the 4th quarter will also be released early tomorrow morning. It can cause some movement in the bond market, but should have a minimal impact on mortgage pricing. If the productivity reading varies greatly from analysts’ forecasts of a 1.7% decline, we may see some movement in mortgage rates. Higher levels of worker productivity is good news for the bond market because it allows the economy to expand while keeping inflation subdued.
December’s Factory Orders data is also scheduled to be posted in the morning but at 10:00 AM ET. It is similar to last week’s Durable Goods Orders release in giving us a measurement of manufacturing sector strength, but this data includes new orders for both durable and non-durable goods. It is not one of the more important reports we get each month, however, it can influence mortgage pricing if it varies greatly from forecasts. Analysts are expecting a 2.6% decline in new orders, indicating a softening manufacturing sector. The bond market would like to see a larger decline, meaning that manufacturing activity was even weaker than many had thought.