Wednesday’s bond market has opened in negative territory again, pushing the benchmark 10-year Treasury Note yield back to our key resistance level of 2.44%. The stock markets are mixed with the Dow up 59 points and the Nasdaq down 2 points. The bond market is currently down 5/32, which should keep this morning’s mortgage rates close to yesterday’s levels.
This morning had only one piece of economic data posted because the ADP employment report was moved to tomorrow. That left July’s Factory Orders data at 10:00 AM ET today. The Commerce Department announced that new orders for combined durable and non-durable goods rose 10.5%. This was a large increase but 11.0% was forecasted so it did not come as a surprise and has not had much of an impact on this morning’s mortgage rates.
At 2:00 PM ET this afternoon, the Federal Reserve will release its Beige Book report. This report details current economic conditions in the U.S. by Federal Reserve regions. It is believed to be a key source of information when the Fed meets for their FOMC meetings and is usually released approximately two weeks prior to each meeting. If it reveals any significant surprises or changes from the previous release, we may see movement in the markets and mortgage pricing as analysts adjust their theories on the Fed’s next monetary policy move.
Tomorrow now has three pieces of data scheduled, all during early morning hours. The first will be the ADP Employment report at 8:15 AM ET. This report has the potential to cause some movement in the markets if it shows much stronger or weaker numbers. It tracks changes in private-sector jobs of the company’s clients that use them for payroll processing. While it does draw attention, it is my opinion that it is overrated and is not a true reflection of the broader employment picture. It also is not very accurate in predicting results of the monthly government report that follows a couple days later. Still, because we sometimes see a noticeable reaction to the report, it is on this week’s calendar.
Next up is last week’s unemployment figures. They are expected to show that 300,000 new claims for unemployment benefits were filed last week. This would be a small increase from the previous week’s 298,000 initial claims. The larger 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.
Also at 8:30 AM ET will be the revised 2nd Quarter Productivity numbers. This data measures employee productivity in the workplace. Strong levels of productivity allow the economy to expand without inflation concerns. It is expected to show little change from the previous estimate of a 2.5% increase. Forecasts are currently calling for a 2.6% increase, meaning productivity was slightly better from April through June than previously thought. This would technically be good news for the bond market and mortgage rates, but this data is considered to be only moderately important to the markets. Therefore, it will take a sizable variance from forecasts for this report to influence mortgage rates. Favorable news would be a sizable upward revision in productivity.