Mortgage rates are holding their positions this week in the face of very mixed data about the US economy. Today appears to be setting up to be another day of relative calm when compared to the vast majority of August. Barring a surprise from the ISM report at 10 AM ET this morning or in tomorrow’s Non-Farm Payrolls report (NFP), we will finish the market’s “Summer” season at very attractive levels.
Already this morning we received the weekly jobless claims report. The results were very much in line with expectations. Somewhat surprising was the result in the monthly measure of productivity which showed a larger decline than anticipated and dropped for the third consecutive quarter. The last two times that occurred were just before the major recessions of 1973-74 and 1979 (remember President Carter’s malaise?).
The ISM Index is expected to drop below a measure of 50 for the first time in two years in today’s report. This report is one of the two key measures of manufacturing activity in the US, the other being yesterday’s factory orders report. The factory orders report surprised to the upside making today’s ISM Index very important. A similar upward surprise in manufacturing could send mortgage rates higher today, but a drop in line with expectations will support the tick downward in rates that is currently underway.
Assuming we get through the ISM report with little shock today I expect we will finish the week at these attractive current mortgage rate levels. I do not expect any surprise in the NFP report tomorrow. I expect a mixed NFP report to go along with mixed data this week. Tomorrow could actually be a very calm day as traders head out early for the long holiday weekend.
Next week is a very slow week for data as traders and analysts return from Summer vacations. Incidentally, the President and Congress will be back from vacation as well. Therefore the biggest event next week will likely be President Obama’s speech on jobs to a joint session of Congress.
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