Daily Rate Lock Advisory

Indexes Affecting Rate Lock

High

Unknown

ISM Index (Institute for Supply Management)

Activities will begin with the release of the highly important Institute for Supply Management's (ISM) manufacturing index at 10:00 AM ET tomorrow. This index surveys trade executives about business conditions during the month. A reading above 50.0 means that more surveyed executives felt that business improved last month than those who said it had slowed. Analysts are expecting to see a 54.0 reading, up from June's 53.3. Favorable news for mortgage rates would be a noticeably weaker reading because waning manufacturing activity is a sign of a slowing economy that makes bonds more appealing to investors.

Medium

Unknown

Factory Orders

June's Factory Orders data is next on the calendar with a Tuesday 10:00 AM ET release. This report is similar to last week’s Durable Goods Orders report but tracks new orders for both durable and non-durable goods during the month of June. Since a significant portion of the data was released previously, this version likely will not have a big impact on the markets. Analysts are expecting to see an increase in new orders of approximately 0.3% to rebound from April's 1.3% decline. An unexpected decline would be considered good news for bonds and mortgage pricing, but it will take a large variance from forecasts for this report to influence mortgage rates.

Medium

Unknown

ADP Employment

Payroll processor ADP will announce their monthly private-sector employment prediction at 8:15 AM ET Wednesday. Since it is not a government agency report, it isn't considered to be highly important. However, as with any employment data, it does draw some attention. It is easy to argue that it is given more attention than it deserves, particularly because many rely on it to predict the monthly government figures, often without success. Forecasts are calling for July to show 75,000 new private-sector payrolls. Good news for rates would be a much smaller number.

Medium

Unknown

ISM Service Index

The Institute for Supply Management's (ISM) non-manufacturing index (aka service index) for July is next on the list. It will be posted Wednesday morning at 10:00 AM ET. This is the sister report of tomorrow’s index with this version tracking executive opinions on business conditions in the service sector rather than manufacturing. It is expected to show a reading of 54.4, up from June's 54.0. As with the manufacturing version, a reading above 50.0 means more surveyed executives felt business improved during the month than those who said it worsened. Good news for mortgage rates would be a much weaker than predicted reading.

Medium

Unknown

Productivity and Costs (Quarterly)

Thursday has two relatively minor pieces of data scheduled. Besides the weekly unemployment update, we will also get the 2nd quarter Productivity Index at 8:30 AM ET. 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.

High

Unknown

Employment Situation

The final release of the week is one of the most important monthly economic reports that we see. July’s Employment report will be posted at 8:30 AM ET Friday, giving us the U.S. unemployment rate, number of jobs added or lost during the month and average hourly earnings. Forecasts show 90,000 new payrolls were added last month, while the unemployment rate held at June’s 4.2%. Earnings are predicted to have risen 0.3%. Good news for rates would be a smaller payroll number, higher unemployment rate and flat earnings. This is one of the most influential monthly reports the financial markets see.

Medium

Unknown

Fed Talk

Also worth noting is the fact the Fed's required pre-FOMC meeting quiet period is no longer applicable, so we will be hearing from individual Fed members in the coming weeks. Normally, they wouldn't be of much interest so close to the FOMC events last Wednesday, but the three dissenting votes that felt the Fed should have raised key rates boosts the possibility of seeing a noticeable reaction to one of the speeches. These speaking events are sprinkled throughout the week, meaning they could come into play at any time.

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Unknown

none

Overall, Friday is the most important day for rates due to the importance the monthly Employment report carries. The calmest day may be Thursday unless something unexpected happens. We are expecting to see an active week for rates, so please proceed cautiously if still floating an interest rate and closing in the near future.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

ISM Index (Institute for Supply Management)

Factory Orders

ADP Employment

ISM Service Index

Productivity and Costs (Quarterly)

Employment Situation

Fed Talk

none

Float / Lock Recommendation