DAILY MARKET UPDATE

Monday’s bond market has opened in positive territory following favorable economic news. Stocks are starting the week mixed with the Dow down 75 points and the Nasdaq up 22 points. The bond market is currently up 6/32 (3.67%), but heavy selling Friday is going to cause this morning’s rates to be higher by approximately .250 - .375 of a discount compared to Friday’s early pricing.

April’s Factory Orders data was one of the two economic reports that were posted late this morning. The Commerce Department announced a 0.4% increase in new orders at U.S. factories, falling short of the 0.8% rise that was expected. The smaller increase hints at slower than thought economic activity, making the report good news for mortgage rates.

The Institute for Supply Management (ISM) gave us their service index, announcing a reading of 50.3% that was also weaker than forecasts. As with last week’s manufacturing index from the ISM, a weaker reading is good news for bonds and mortgage rates because it is a sign of slowing economic activity.

Tomorrow doesn’t have anything scheduled that we need to be concerned with. The rest of the week brings almost nothing that is likely to change rates. There are no Treasury auctions or Fed events to watch, not even Fed members speeches since they are in their pre-FOMC meeting quiet period.

Overall, today may be the most active day for rates this week. The best candidate for the calmest day is practically any other day expect today. There is a good chance that the markets and mortgage rates will be much more stable than we have seen over the past few weeks, unless something unexpected happens. If closing soon and still floating an interest rate, it would be a good idea to keep an eye on the markets as they can get volatile without notice. However, it appears this week carries a much lower risk level for floating a rate than recent weeks.