Thursday’s bond market has opened in positive territory following a weak opening on stocks. The stock markets are posting sizable losses with the Dow down 174 points and the Nasdaq 43 points. The bond market is currently up 9/32, which, with yesterday's late strength, should improve this morning’s mortgage rates by approximately .375 of a discount point compared to yesterday’s morning rates.

This morning’s economic data gave us mixed results, beginning when the Labor Department reported that the U.S. unemployment rose 0.1% last month to stand at 9.5%. This was slightly lower than the 9.6% that many analysts and market traders had expected and can be considered negative for bonds because it fell short of forecasts.

However, the other two headline numbers from this report gave us favorable results and are making the biggest impact on bond trading this morning. The report showed that 467,000 jobs were lost during the month, exceeding forecasts of approximately 365,000. In addition, the reading that gives average hourly earnings showed no change from May’s level. This means that earnings did not rise when they were expected to move higher 0.1%. While the earnings data may not be good for workers, it shows that wage inflation is little threat at this time.

May’s Factory Orders data was released late this morning by the Commerce Department. It showed that combined orders for durable and non-durable goods rose 1.2% last month. This was also stronger than analysts’ forecasts and hints that manufacturing activity was better than expected. Fortunately, this data is not one of the most important reports we see each month and has not derailed this morning’s momentum from the employment figures.

Overall, the Employment report was favorable for bonds with the larger than expected decline in jobs taking center stage. The unemployment rate was somewhat of a disappointment, but it was still an increase from May’s rate. The average hourly earnings reading is the least important of the three but still gave us favorable results. The Factory Orders report was not favorable to bonds or mortgage rates, but it also has nowhere near the level of importance as the monthly Employment report. Therefore, today’s data can be considered good news for bonds and mortgage rates.

The financial markets will be closed tomorrow in observance of the Independence Day holiday and will reopen Monday morning. There will not be an early close in the bond market today, but I suspect that trading will be thin during afternoon hours as market participants head home for the holiday weekend. This means we should see a fairly quiet afternoon in bonds and mortgage pricing as long as no unexpected news surprises the markets.

Next week is very light in terms of relevant economic data being posted. This could leave the bond market and mortgage rates to the mercy of outside influences. There will be no update to this report tomorrow, but look for details on next week’s events in Sunday’s weekly preview.

Wednesday’s bond market has opened in negative territory following stock gains and a little stronger than expected economic report. The stock markets are rebounding from yesterday’s losses with the Dow up over 100 points and the Nasdaq up 22 points. The bond market is currently down 8/32, but we likely see little change in this morning’s mortgage rates due to strength in trading late yesterday.

Today’s relevant economic data came from the Institute of Supply Management (ISM), who reported that their manufacturing index for June stood at 44.8. This was higher than what analysts had forecasted, indicating that manufacturer sentiment was stronger than thought. This is considered negative news for bonds and mortgage rates because strengthening manufacturing activity means that the economy is working towards a recovery. A weak economy makes bonds more attractive and stocks less appealing to investors.

Tomorrow morning brings us the release of two reports, including the almighty Employment report. The Labor Department will post June’s unemployment rate, number of new payrolls added and average hourly earnings early tomorrow. 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, a large decline in payrolls and no change in earnings. Weaker than expected readings would likely help boost bond prices and lower mortgage rates tomorrow. However, stronger than expected readings could fuel a bond sell-off and be extremely detrimental to mortgage pricing. Analysts are expecting to see the unemployment rate rise 0.2% to 9.6%, while 363,000 jobs were lost and a 0.1% rise in earnings.

The Commerce Department will post May’s Factory Orders data late tomorrow morning, which is similar to the Durable Goods Orders report that was released last week. The biggest difference is that this week’s report covers both durable and non-durable goods. It usually doesn’t have as much of an impact on the bond market as the durable goods data does, but can lead to changes in mortgage pricing if it varies greatly from forecasts. Current expectations are showing a 0.8% rise in new orders from April’s levels. A smaller than expected rise in orders would be considered good news for the bond market and could help lower mortgage rates slightly. However, the employment data is much more important to the markets than this report is.

The financial markets will be closed Friday in observance of the Independence Day holiday and will reopen Monday morning. This may lead to additional volatility tomorrow as traders prepare for and protect themselves over the long weekend. There will not be an early close in the bond market tomorrow, but I suspect that trading will be thin during afternoon hours as market participants head home for the holiday weekend.

Tuesday’s bond market has opened in negative territory despite early stock losses and weaker than expected economic data. The stock markets are in selling mode after digesting this morning’s economic news with the Dow down 105 points and the Nasdaq down 9 points. The bond market is currently down 9/32, which will likely push this morning’s mortgage rates higher by approximately .125 - .250 of a discount point.

The Conference Board gave us today’s only relevant economic data when they posted June’s Consumer Confidence Index (CCI) late this morning. They reported a reading of 49.3 that was well below forecasts of 55.1. This means that consumers were much less optimistic about their own financial situations than many had thought. This is actually supposed to be good news for the bond market and mortgage rates since it indicates consumers are less apt to make large purchases in the near future. Unfortunately for mortgage shoppers, bond traders seem to have forgotten that this morning.

The Institute of Supply Management (ISM) will release their manufacturing index for June late tomorrow morning. This index measures manufacturer sentiment by surveying trade executives on current business conditions. A reading below 50 means that more surveyed executives felt business worsened in the month than those who felt it had improved. Analysts are expecting a reading of 44.0. That would indicate that manufacturers felt business improved slightly from the previous month. Good news for bonds and mortgage rates would be a weaker than expected reading.

Thursday brings us the release of two monthly reports, one being the extremely important Employment report. The other, May’s Factory Order’s data will likely have little impact on the financial markets or mortgage rates as most of the attention will be directed towards the employment figures.

The financial markets will be closed Friday in observance of the Independence Day holiday, but there will be no early close for the bond market Thursday as has been the case previous years. However, it will still probably be a light afternoon in trading as traders head home for the long weekend. This could magnify the reaction the markets will have to the morning’s data.

Monday’s bond market has opened in positive territory as investors prepare for this week’s economic news. The stock markets have opened the holiday-shortened week in positive ground with the Dow up 74 points and the Nasdaq up 5 points. The bond market is currently up 12/32, which should improve this morning’s mortgage rates slightly.

This week brings us the release of only four economic reports for the markets to digest, but three of them are considered to be important and one of those three is arguably the most influential report we see each month. In addition, these reports are being released over just three trading days.

There is no relevant economic data scheduled for release today. June’s Consumer Confidence Index (CCI) is the first report of the week and will be posted late tomorrow morning. This index is important to the financial markets because it measures consumer willingness to spend, which is important because consumer spending makes up two-thirds of the U.S. economy. If it shows a sizable increase in confidence from last month, we can expect to see the bond market falter and mortgage rates rise slightly. Current forecasts are calling for a reading of 55.1, up slightly from last month’s 54.9 reading.

Overall, tomorrow and Wednesday’s data (Consumer Confidence Index and ISM index) should bring some volatility in trading and mortgage rates, but Thursday’s Employment report is definitely the most important of the week. Its impact can single handily lead to an improvement or increase in mortgage rates for the week.

The financial markets will be closed Friday in observance of the Independence Day holiday, but there will be no early close for the bond market Thursday as has been the case previous years. However, it will still probably be a light afternoon in trading as traders head home for the long weekend.

Week ahead Report