Wednesday’s bond market has opened in negative territory following stronger than expected employment-related news. A positive open in stocks is also contributing to the early losses in bonds. The Dow is currently up 51 points while the Nasdaq has gained 7 points. The bond market is currently down 4/32 (2.34%), which should push this morning’s mortgage rates higher by approximately .125 of a discount point.
Today’s only relevant economic data was ADP’s Employment report for October at 8:15 AM ET. It revealed an increase of 230,000 private-sector jobs last month, exceeding forecasts of 220,000. It was also a slight increase from September’s revised payrolls of 225,000, meaning that the report indicates more job growth in the private sector than expected. That makes the data negative for the bond and mortgage markets, but as we can see by the subtle reaction so far, the data didn’t draw much attention.
Tomorrow has two reports scheduled for release with neither being considered highly important to the markets and mortgage rates. First up is 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 last week. This would be a small decline from the previous week’s 287,000 initial claims. The higher the number of new claims, the better the news it is for mortgage rates as rising claims is a sign of employment sector weakness. However, because this report tracks only a single week’s worth of new claims, it usually takes a surprise spike or drop for it to noticeably affect mortgage rates.
The 3rd Quarter Productivity reading will also be released early tomorrow morning. It is expected to show a 1.5% increase in worker productivity during the third quarter. A larger increase would be good news for the bond market because higher levels of employee productivity allow the economy to expand without inflationary pressures being a concern. This is a relatively low importance report, meaning it will take a significant variance from forecasts for it to directly affect mortgage rates.