Mortgage bond prices were higher this week which put downward pressure on rates. Disappointing data and uncertainty about the future of the economy resulted in stronger demand for US debt instruments. Rates were lower Monday and a huge miss on the Institute of Supply Management release Tuesday morning put additional downward pressure on rates. There was a slight selloff Tuesday afternoon after the runup in prices but that was countered by weak ADP employment data Wednesday morning. ADP payrolls increased 135K versus the expected 150K. Weekly jobless claims were 219K. Analysts expected a 215K reading. Factory orders fell 0.1%. Unemployment was 3.5% versus the expected 3.7%. Non-farm payrolls increased 136K versus the expected 145K. Mortgage interest rates finished the week better by approximately 5/8 of a discount point.


Economic IndicatorRelease Date & TimeConsensus EstimateAnalysis
Consumer CreditMonday, Oct. 7,
3:00 pm, et
$24BLow importance.  A significantly large increase may lead to lower mortgage interest rates.
Producer Price IndexTuesday, Oct. 8,
8:30 am, et
Up 0.2%,
Core up 0.2%
Important.  An indication of inflationary pressures at the producer level.  Weaker figures may lead to lower rates.
3-year Treasury Note AuctionTuesday, Oct. 8,
1:15 pm, et
NoneImportant.  Notes will be auctioned.  Strong demand may lead to lower mortgage rates.
10-year Treasury Note AuctionWednesday, Oct. 9,
1:15 pm, et
NoneImportant.  Notes will be auctioned.  Strong demand may lead to lower mortgage rates.
Consumer Price IndexThursday, Oct. 10,
8:30 am, et
Up 0.2%,
Core up 0.1%
Important.  A measure of inflation at the consumer level. Weaker figures may lead to lower rates.
Weekly Jobless ClaimsThursday, Oct. 10,
8:30 am, et
212KImportant.  An indication of employment.   Higher claims may result in lower rates.
30-year Treasury Bond AuctionThursday, Oct. 10,
1:15 pm, et
NoneImportant.  Bonds will be auctioned.  Strong demand may lead to lower mortgage rates.
U of Michigan Consumer SentimentFriday, Oct. 11,
10:00 am, et
93.3Important.  An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

Manufacturing Weakness

The Institute for Supply Management (ISM) index last week flashed a huge warning sign that caught everyone’s attention. ISM printed at 47.8 which was considerably weaker than the expected 50.2 reading. The ISM Manufacturing Index is based on surveys of more than 300 manufacturing firms and monitors employment, production, inventories, new orders and supplier deliveries. It is one of the first data releases each month and influences the tone of both investor and business confidence. A composite index reading of 50 can be thought of as a “swing point.” A reading above 50 implies an increase in economic activity, while a reading below 50 indicates a decline. The ISM report is difficult for economists to forecast because there is little data upon which to base an educated guess. The report has a large “surprise factor” and can cause market swings as we saw last week. The big concern going forward is whether the report is an anomaly or a sign of future economic trouble.