Rate Lock Advisory

Indexes Affecting Rate Lock

Medium

Negative

Domestic Political Issues

The temporary funding bill this weekend that averted a government shutdown more or less kicked the can down the road for 45 days. We will likely find ourselves in the same situation right before Thanksgiving. For now, the government will continue to operate as usual. Theoretically, this weekend’s events should cause a stock rally, bond selling and an upward move in mortgage rates. We can expect to see the gains from late last week, that were fueled in part by an expected shutdown, to be reversed. At the time of this evening’s posting of this report, it does look like Treasuries are reacting that way in overseas trading. A lot can happen between now and tomorrow’s open, but unless there is a change in direction overnight, we can expect an increase in tomorrow’s mortgage rates unless the day’s economic data comes in much weaker than expected.

High

Unknown

ISM Index (Institute for Supply Management)

The Institute for Supply Management (ISM) will start this week's economic activities at 10:00 AM ET tomorrow with the release of this month's manufacturing index. We consider this to be highly important because it measures manufacturer sentiment and is usually the first report released that covers the preceding month. Tomorrow's release is expected to show a September reading of 47.8, indicating that manufacturer sentiment strengthened a little from August's 47.6. A smaller than expected reading would be good news for bonds and mortgage pricing.

Medium

Unknown

ADP Employment

Wednesday has three economic reports that we will be watching. First will be September's ADP Employment report at 8:15 AM ET. It has the potential to cause some movement in the markets if it shows much stronger or weaker numbers than forecasts. This report tracks changes in private-sector jobs, using ADP's payroll processing clients as a base. However, it is not accurate in predicting results of the monthly government report that follows a couple days later. Still, because we have seen reactions to the report, we should be watching it. Analysts are expecting it to show that 150,000 new payrolls were added. Good news for mortgage rates would be a noticeably smaller increase.

Medium

Unknown

ISM Service Index

Next up will be the ISM’s non-manufacturing index, also known as the services index. The 10:00 AM ET release is predicted to show the service sector weakened last month, contradicting its sister manufacturing index tomorrow morning. August’s reading stood at 54.5. Forecasts show 53.7 for September, meaning fewer surveyed executives felt business improved last month in the service sector than did in August. As a sign of economic weakness, a larger decline would be favorable for bonds and mortgage rates.

Medium

Unknown

Factory Orders

August's Factory Orders data will finalize Wednesday’s economic releases at 10:00 AM ET. It is similar to last week's Durable Goods Orders release except this version includes orders for both durable and non-durable goods. Forecasts are calling for a 0.3% increase in new orders. A decline would be good news for the bond market and mortgage rates while a larger rise would be bad news. Since a good portion of the data was already released last week, it is unlikely that this report will have a noticeable impact on Wednesday’s mortgage pricing.

Medium

Unknown

Geopolitical/Financial Issues

Also worth noting about Wednesday is the OPEC meeting. This is where the 13 oil producing member nations set output quotas, directly impacting the global oil supply. Raising production quotas means there is more oil available in the marketplace and should lower gas and other energy costs, easing inflationary pressures-particularly at the pump. On the other hand, if they lower output, we will likely see crude oil prices rise that translate into higher fuel costs and more inflation fears that make bonds less attractive to investors. The latter would lead to higher mortgage rates.

High

Unknown

Employment Situation

Friday has what is arguably the single most important economic report we get each month. That will be September's Employment report at 8:30 AM. It has many statistics and readings on the employment situation, but the most important are the unemployment rate, the number of new jobs added or lost during the month and average hourly earnings. Current expectations are for the unemployment rate to have slipped 0.1% to 3.7%, 158,000 new payrolls and a 0.3% rise in average earnings. Weaker than expected readings should rally bonds enough to improve mortgage rates, especially if the earnings data comes in light.

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Unknown

none

Overall, Friday is the most important day of the week due to the importance of the Employment report but tomorrow and Wednesday also may be active days for rates. Tuesday is best candidate for calmest day, even though we still should see some movement in pricing that day too. We can expect to see a fair amount of movement in rates this week, so it would be prudent to keep an eye on the markets if still floating an interest rate and closing in the near future.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

Domestic Political Issues

ISM Index (Institute for Supply Management)

ADP Employment

ISM Service Index

Factory Orders

Geopolitical/Financial Issues

Employment Situation

none

Float / Lock Recommendation