Wednesday’s bond market has opened in negative territory with this morning’s only relevant economic data showing unfavorable results. The major stock indexes are showing moderate losses with the Dow down 67 points and the Nasdaq down 6 points. The bond market is currently down 8/32 (1.85%), which should push this morning’s mortgage rates slightly higher.
ADP’s employment report was posted at 8:15 AM ET this morning, giving us some insight into the private-sector portion of the employment market. It showed an increase of 214,000 jobs, exceeding forecasts of 190,000. This is a sign that the employment sector may be stronger than expected, making the data bad news for mortgage rates. However, this report does not carry the importance of Friday’s monthly government Employment report, so its impact on today’s rates has been relatively minimal.
The Fed’s Beige Book will be posted at 2:00 PM ET this afternoon. This report details economic activity throughout the country by Federal Reserve region. They rely heavily on this data during their FOMC meetings, so look for a potential reaction to come mid-afternoon. It probably will not cause a major sell off in the stock or bond markets, but it is still worth watching.
Tomorrow has three pieces of data scheduled for release, but none of them are considered to be highly important. Last week’s unemployment figures will start them at 8:30 AM ET. They are expected to show 270,000 new claims for unemployment benefits were filed last week. This would be a small decrease from the previous week’s 272,000 initial claims, indicating the employment sector strengthened slightly last week. Since rising claims hints at a weakening employment sector, the larger the number the better the news it is for mortgage rates. Although, it is worth noting that because this is only a weekly snapshot, it usually takes a surprise increase or decline for the report to noticeably affect rates.
Also at 8:30 AM will be the release of the revised Productivity index for the 4th Quarter of last year. The preliminary reading posted last month showed a decline of 3.0% in worker output. Analysts are expecting to see a downward revision of 0.3% to last month’s initial reading. Employee productivity is watched fairly closely because a higher level of output per hour is believed to mean that the economy can expand without inflation concerns. However, since this data is quite aged now, it likely will have little impact on Thursday’s mortgage rates unless it shows a significant change.
The final report of the day is January’s Factory Orders at 10:00 AM ET, which will give us a measurement of manufacturing sector strength. This data is similar to last week’s Durable Goods, except this report covers orders for both durable and non-durable goods. Current forecasts are calling for an increase in new orders of approximately 2.0%. A smaller than expected increase would be good news for the bond market and could lead to a slight improvement in mortgage rates since it would point towards economic weakness.