Daily Rate Lock Advisory

Indexes Affecting Rate Lock

High

Negative

ISM Index (Institute for Supply Management)

August's manufacturing index from the Institute for Supply Management (ISM) will start this week's activities at 10:00 AM ET Tuesday morning. This is one of the highly important reports we will get this week. It measures manufacturer sentiment and is expected to have improved from July's 48.0. A reading below 50 is considered a sign of economic weakness because it means that more surveyed manufacturers felt business worsened this month than those who felt it had improved. A lower reading than the predicted 48.5 would be considered good news for bonds and likely lead to an improvement in mortgage rates Tuesday morning.

Medium

Unknown

Factory Orders

Wednesday has a morning and an afternoon event that we will be watching. July's Factory Orders data will be posted at 10:00 AM ET. This is another manufacturing sector report and is similar to last week’s Durable Goods Orders report, but includes new orders for both durable and non-durable goods. It is expected to follow suit of last week's version with a noticeable decline in new orders. Forecasts show a 1.3% drop in orders at U.S. factories, hinting at weakness in the manufacturing sector. A much larger decline would be favorable for bonds. However, this data likely won't cause much movement in rates unless its results vary greatly from forecasts since the big-ticket products portion of the report was released already.

Medium

Unknown

Fed Beige Book

The Federal Reserve will release their Beige Book report at 2:00 PM ET Wednesday. This release details current economic conditions in the U.S. by Federal Reserve region through the eyes of their business contacts. It is believed to be a key source of data when the Fed meets for their FOMC meetings and is usually released approximately two weeks prior to each meeting. If it reveals any significant surprises or changes from the previous release, we may see movement in the markets and mortgage pricing as analysts adjust their theories about what the Fed will do regarding a rate cut at their September 16-17 FOMC meeting. Good news for mortgage rates would be weaker activity with signs of easing inflation that boosts the possibility of the Fed lowering key short-term interest rates at the upcoming meeting.

Medium

Unknown

ADP Employment

Next up is August's ADP Employment report before the markets open Thursday morning. We usually get this report on a Wednesday morning, but the holiday is pushing it back one day. It tracks changes in private-sector jobs, using the company's payroll processing clients as a base. Analysts are expecting to see 70,000 new private-sector jobs were added to the economy last month. A number that is higher than expected would be negative news for mortgage rates while a much smaller increase would be favorable.

Medium

Unknown

Productivity and Costs (Quarterly)

Also early Thursday are the weekly unemployment update and revised 2nd Quarter Productivity numbers, both at 8:30 AM ET. Strong levels of productivity in the workplace allow the economy to expand without inflation concerns. It is expected to show a 2.4% increase in productivity, unchanged from the initial estimate, while the labor costs reading held at up 1.6%. Good news for the bond market and mortgage rates would be a solid upward revision in productivity and lower labor costs, but this report doesn't usually cause much movement in rates.

Medium

Unknown

ISM Service Index

Thursday's fourth release will come from the Institute for Supply Management (ISM), who will release their non-manufacturing index (aka service index) at 10:00 AM ET. This is the sister report of Tuesday's ISM manufacturing index with this version tracking business executive opinions on conditions in the service sector rather than manufacturing. It is expected to show a reading of 50.5, up from July's 50.1. 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.

High

Unknown

Employment Situation

August's Employment report is set to be released at 8:30 AM ET Friday, which will give us the U.S. unemployment rate, number of new jobs added or lost and average hourly earnings for this month. July’s report that was posted earlier this month caused quite a fuss in the markets and in Washington D.C. The ideal scenario for the bond market and mortgage rates is rising unemployment, a drop in the number of new payrolls and earnings to fall slightly. Analysts are expecting to see that the unemployment rate inched up from July's 4.2% to 4.3% and that 78,000 jobs were added during the month. The average earnings reading is forecasted to have risen 0.3% from July. Weaker than expected readings would be another warning sign the employment sector is in worse shape than thought and would be very good news for bonds and mortgage rates. However, if we get stronger than expected numbers, the odds of a Fed rate cut next month may drop and mortgage rates should move higher Friday.

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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 Tuesday's ISM index can also cause a noticeable change in rates. No day stands out as a good candidate for a calm day for rates. There is a high probability of it being a volatile week for the markets. Therefore, 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

Fed Beige Book

ADP Employment

Productivity and Costs (Quarterly)

ISM Service Index

Employment Situation

none

Float / Lock Recommendation