Mortgage Rates Roll, September 1, 2010

Mortgage Rate trend Direction:     Up

Economic Reports/Rate Impact:  Construction Spending, 10:00 AM ET, Low Rate Impact

                                                            ISM Index, 10:00 AM ET, Moderate Rate Impact

Key News:                                         Chinese Manufacturing

Summary

August is history.  For US stock market investors, that meant bad news as the month featured a drop in both prices and volume.  For those seeking mortgage loans, the history of August was found in re-occurring all-time lows in mortgage rates.  Where does September take us?  On day 1 it appears the stock market wants to get started on a better foot. Early stock activity points to a significantly positive opening.  While we are in a new month, one similar pattern may play out today in the stock market...traders moving the market back and forth within a fairly tight range. The mortgage-backed securities market, and therefore mortgage pricing, appear headed for a lower open this morning.

Impact of economic reports

The two official reports today are released after initial mortgage pricing is typically released by the lenders.  Consequently, we may see a slight delay in rate sheet availability this morning, though both reports are expected to show negative trends.  The data that is available already this morning comes from the unofficial Jobs Report put out by private sector employment services firm ADP and economic consultant Macroeconomic Advisors (MA).

This ADP/MA report which is released each month ahead of the official monthly jobs report from the US Department of Labor, showed surprising weakness continuing in the US job market.  Some, slight improvement was expected by analysts, yet the report showed continuing job losses, primarily in the "goods producing sector".

Also released today will be the sales figures for all the major US automakers.  Expectations are for weak results for August.

Impact of international and political events

A report out of China showed that manufacturing has increased over the past month, reversing several consecutive months of declines.  This news has had a big impact on European and US markets today.  With the economy in Japan, Europe and the US under stress, can this positive trend continue.