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Wednesday's bond market has opened in negative territory after this
morning's stock markets showed early gains. Stocks have continued to move
higher, pushing the Dow up 89 points and the Nasdaq up 24 points. The bond
market is currently down 8/32, which should push this morning's mortgage
rates higher by approximately .125 of a discount point.
There is economic data scheduled for release today that is relevant to
mortgage rates. So, as expected, the stock markets are having the biggest
influence on this morning's bond trading and mortgage pricing. It appears
that the major stock indexes have more room to improve, therefore, it would
not surprise me to see another upward revision to mortgage rates later
today.
Tomorrow brings us the release of three reports that may affect mortgage
rates. The first is the revised 1st Quarter Productivity and Costs data
that measures employee output and employer costs for wages and benefits. It
is considered to be a measurement of wage inflation. It is believed that the
economy can grow with low inflationary pressures when productivity is high.
Last month's preliminary reading revealed a 3.6% increase, but I don't think
this piece of data will have much of an impact on the bond market or
mortgage pricing unless it varies greatly from its forecasted revised
reading of 3.4%.
The second release of the day will come from the Commerce Department,
who will post April's Factory Orders data during late morning trading. This
manufacturing sector report is similar to last week's Durable Goods Orders
release, but also includes orders for non-durable goods. It can cause some
movement in the financial markets if it varies from forecasts by a wide
margin, but it isn't expected to cause much change in rates this month.
Current forecasts are calling for an increase in orders of 1.7%.
The third report of the day may have a noticeable impact on the markets
or be a non-factor depending on its results. The Institute for Supply
Management will release its services index late tomorrow morning. It is
expected to show a reading of 55.6, with the same principals as yesterday's
ISM manufacturing index. If this reading varies greatly from forecasts, we
may see volatility in the markets and mortgage rates. However, if its
results are in the general area of expectations, it will likely have no
influence on the markets and mortgage pricing tomorrow.
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