This week brings us the release of only three monthly economic reports for the bond market to digest. The first report of the week comes late tomorrow morning when the Institute for Supply Management (ISM) will post their manufacturing index for September. This index gives us an indication of manufacturer sentiment. Analysts are expecting a decline from the 54. 5 reading last month to 53.5 this month. The 50.0 benchmark is extremely important because below that level means more surveyed executives felt business worsened than those who said it had improved. This data is important not only because it measures manufacturer sentiment, but it is very recent data. Some economic releases track data that are 30-60 days old, but the ISM index is only a few weeks old. If we get a smaller than expected reading, I expect to see the bond market rally and mortgage rates fall further tomorrow morning.
The next release is Wednesday when the Commerce Department will post August’s Factory Orders data. This manufacturing sector report is similar to last week’s Durable Goods Orders release, but includes orders for non-durable goods. It can usually impact the financial markets enough to change mortgage rates if it varies from forecasts by a wide margin. Current forecasts are calling for a decline in new orders of approximately 0.2%. An unexpected rise could drive mortgage rates higher, while a weaker than expected reading should push them lower Wednesday.
The Labor Department will post September’s Employment report early Friday morning. This report will reveal the U.S. unemployment rate, number of new payrolls added and average hourly earnings. These are considered to be very important readings of the employment sector and can have a huge impact on the financial markets. The ideal scenario for the bond market is rising unemployment, falling payrolls and a drop in earnings.
Weaker than expected readings should help boost bond prices and lower mortgage rates Friday. However, stronger than forecasted readings could be disastrous for mortgage pricing. Analysts are expecting to see no change in the unemployment rate of 4.7%, an increase in new payrolls of approximately 120,000 and a 0.3% increase in earnings.
Overall, look for Friday to be the big day of the week, but tomorrow may also bring changes to mortgage rates. The bond market will close early Friday ahead of the Columbus Day holiday and will reopen Tuesday morning. This may create additional volatility in the markets as investors move to protect themselves over the long weekend.
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Mortgage Loan Market Commentary
This week brings us the release of only three monthly economic reports for the bond market to digest. The first report of the week comes late tomorrow morning when the Institute for Supply Management (ISM) will post their manufacturing index for September. This index gives us an indication of manufacturer sentiment. Analysts are expecting a decline from the 54. 5 reading last month to 53.5 this month. The 50.0 benchmark is extremely important because below that level means more surveyed executives felt business worsened than those who said it had improved. This data is important not only because it measures manufacturer sentiment, but it is very recent data. Some economic releases track data that are 30-60 days old, but the ISM index is only a few weeks old. If we get a smaller than expected reading, I expect to see the bond market rally and mortgage rates fall further tomorrow morning.
The next release is Wednesday when the Commerce Department will post August’s Factory Orders data. This manufacturing sector report is similar to last week’s Durable Goods Orders release, but includes orders for non-durable goods. It can usually impact the financial markets enough to change mortgage rates if it varies from forecasts by a wide margin. Current forecasts are calling for a decline in new orders of approximately 0.2%. An unexpected rise could drive mortgage rates higher, while a weaker than expected reading should push them lower Wednesday.
The Labor Department will post September’s Employment report early Friday morning. This report will reveal the U.S. unemployment rate, number of new payrolls added and average hourly earnings. These are considered to be very important readings of the employment sector and can have a huge impact on the financial markets. The ideal scenario for the bond market is rising unemployment, falling payrolls and a drop in earnings.
Weaker than expected readings should help boost bond prices and lower mortgage rates Friday. However, stronger than forecasted readings could be disastrous for mortgage pricing. Analysts are expecting to see no change in the unemployment rate of 4.7%, an increase in new payrolls of approximately 120,000 and a 0.3% increase in earnings.
Overall, look for Friday to be the big day of the week, but tomorrow may also bring changes to mortgage rates. The bond market will close early Friday ahead of the Columbus Day holiday and will reopen Tuesday morning. This may create additional volatility in the markets as investors move to protect themselves over the long weekend.
Craig S. Higdon, “The Mortgage Black Belt”
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Excelsion Mortgage, www.InvestmentPropertyInsider.com
Craig Higdon has over 14 years experience in financing commercial loans, small business loans, construction loans, and land loans. He owns Excelsion Mortgage, a commercial mortgage brokerage and consultancy offering real estate investors a wide range of resources to help them in their investment activities.
This entry was posted on Monday, September 18th, 2006 and is filed under -Commercial Real Estate Investment, -Mortgage Loan Market Commentary. You can follow any responses to this entry through RSS 2.0. You can leave a response, or trackback from your own site.