Daily Rate Lock Advisory

Indexes Affecting Rate Lock

Medium

Positive

ADP Employment

This morning’s release of July’s ADP Employment report revealed 44,000 new private-sector jobs were added to the economy last month. This was lower than the 75,000 that was expected, giving us an indication that the private employment sector was not as strong as thought. In most cases, any data that shows weaker employment statistics is considered good news for bonds and mortgage rates. Unfortunately, this report does come close to the importance of Friday’s governmental Employment report that gives us much more insight into the sector. This is why we haven’t seen a positive reaction to the data.

Medium

Neutral

ISM Service Index

Today’s second report was July’s non-manufacturing index (aka service index) from the Institute for Supply Management (ISM) at 10:00 AM ET. They announced a reading of 54.1 that was a bit weaker than the 54.4 that was predicted, but also was a modest increase from June’s 54.0. The minor variance and little change from June hint that the service sector was mostly flat last month, allowing us to label the report neutral for mortgage rates.

Medium

Unknown

Fed Talk

We are also looking for a possible market reaction to a speech by Fed Governor Lisa Cook today, albeit it may not be seen until tomorrow morning. She will be speaking in Anchorage, Alaska at 4:05 PM ET with a topic listed as Economic Outlook. While she was not one of the three dissenting votes to keep key short-term rates unchanged at last week’s FOMC meeting, she has previously stated she is willing to vote for a rate hike if inflation doesn’t start retreating towards the Fed’s goal of a 2.0% annual rate. If her comments in the speech lead traders to believe she is close to voting for a Fed rate hike, we could see a negative reaction in the bond and mortgage markets since it would signal that they are worried about inflation. Rising inflation makes bonds less appealing to investors, leading to higher mortgage rates.

Medium

Unknown

Weekly Unemployment Claims (every Thursday)

Tomorrow brings us two relatively minor pieces of economic data with the release of last week’s unemployment figures and the 2nd quarter Productivity Index, both at 8:30 AM ET. Rising claims for jobless benefits are a sign of a weakening employment sector. Therefore, an increase from the previous week’s 197,000 initial claims would be considered favorable for mortgage rates. Analysts are predicting a number around 201,000. The higher the number of new claims, the better the news it is for mortgage pricing.

Medium

Unknown

Productivity and Costs (Quarterly)

The productivity report is another rare occasion when a large increase is considered good news for bonds and mortgage rates. Forecasts show a 0.7% increase in worker output. Employee productivity is relevant because a higher level of output per hour is believed to mean that the economy can expand without inflation concerns. This release also includes a reading on labor costs that can be quite influential if it shows a surprise. A larger rise in output and a softer increase in labor costs would be favorable for rates.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

ADP Employment

ISM Service Index

Fed Talk

Weekly Unemployment Claims (every Thursday)

Productivity and Costs (Quarterly)

Float / Lock Recommendation