Monday's bond market has opened in negative territory
despite favorable economic data stocks showing losses also. The major stock
indexes are starting the week in negative ground with the Dow down 58 points
and the Nasdaq down 26 points. The bond market is currently down 15/32 (1.68%),
but due to strength late Friday, we likely will see little change to this
morning's mortgage rates if comparing to Friday's early pricing. However, I
would not be surprised to see upward revisions to mortgage rates sometime today
unless bonds move into positive ground.
This morning had two pieces of economic data that were relevant to the
mortgage market. The first report was December's Personal Income and Outlays
data at 8:30 AM ET. It showed a 0.3% increase in income and a 0.3% decline in
spending. The income reading matched forecasts while the drop in spending was a
little more than expected. Because consumer spending makes up a significant
portion of the U.S. economy and slowing spending means weaker economic growth,
we can consider this news neutral to slightly favorable for bonds and mortgage
rates.
The Institute of Supply Management (ISM) posted their manufacturing index
for January at 10:00 AM ET today. This index tracks manufacturer sentiment by
rating surveyed trade executives' opinions of business conditions. It came in
at 53.5, falling short of the 54.7 that was expected and down from December's
revised 55.1. That means fewer surveyed manufacturing executives felt business
improved during the month than did in December. This is a sign of manufacturing
sector weakness, so we can consider the data good news for the bond and
mortgage markets.
December's Factory Orders data at 10:00 AM ET is the only economic data we
need to watch tomorrow. 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
2.0% decline in new orders, indicating a softening manufacturing sector. The
bond market would like to see a larger decline, meaning that manufacturing
activity was weaker than many had thought.
Overall, Friday is easily the best candidate for most important day of the
week due to the release of January's monthly Employment report. The calmest day
will probably be Thursday. I am fully expecting to see another very active week
for mortgage rates, so please maintain contact with your mortgage professional
if still floating an interest rate and closing in the near future.
