Daily market commentary

Greetings! Here's your Daily Commentary report compliments of Alan Russell & Princeton Capital! Call me today for current rates and market information at (650) 947-2296.           Wednesday’s bond market has opened flat with no major economic data set for release this morning. Stocks are showing gains with the Dow up 86 points and the Nasdaq up 28 points. The bond market is currently nearly unchanged from yesterday’s close, but we should still see a slight improvement in this morning’s mortgage rates due to strength late Tuesday. This morning’s only relevant economic data was July's Goods and Services Trade Balance data at 8:30 AM ET. It revealed that the U.S. trade deficit stood at $39.2 billion in July, exceeding forecasts of $38.2 billion. However, this data affects the value of the U.S. dollar versus other currencies more than it directly influences bond trading and mortgage pricing. The variance between forecasts and actual results was not wide enough to draw much attention from the bond or mortgage markets. The Federal Reserve will post their Beige Book report at 2:00 PM ET. This report, which is named simply after the color of its’ cover, details current economic conditions by Fed region. It is 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 this afternoon as analysts adjust their theories on the Fed's next move when they meet September 17-18. Tomorrow has three pieces of economic data worth watching. The first is the weekly unemployment update from the Labor Department at 8:30 AM ET, who is expected to announce that 333,000 new claims for unemployment benefits were filed last week. This would be a slight increase from the previous week’s 331,000. The larger the increase in initial claims, the better the news it is for the bond market and mortgage rates because rising claims indicate a weakening employment sector. The second report of the day will be the revised 2nd Quarter Productivity numbers at 8:30 AM also. This data measures employee productivity in the workplace. Strong levels of productivity allow the economy to expand without inflation concerns. It is expected to show an upward change from the previous estimate of a 0.9% increase. Forecasts are currently calling for a 0.6% upward revision, meaning productivity was better than previously thought from April through June. This would technically be good news for the bond market and mortgage rates, but this data is considered to be only moderately important to the markets. Therefore, it will take a sizable variance from forecasts for this report to affect mortgage rates. Favorable news would be a sizable increase in productivity and a decline in a secondary reading that tracks labor costs. August's Factory Orders is the final report of the morning, coming at 10:00 AM ET from the Commerce Department. This manufacturing sector report is similar to last week's Durable Goods Orders release, but also includes orders for non-durable goods. It can impact the bond market enough to change mortgage rates if it varies from forecasts by a wide margin. Analysts are forecasting a decline of 3.7% in new orders, meaning manufacturing activity slowed considerably in August. This would be good news for the bond market and mortgage pricing, but I believe we will need to see a much larger decline for this report to create a noticeable improvement in rates. We also will get a couple of private sector employment reports. They are not nearly influential on the markets as the government-issued reports are, but can have some impact on trading if they show a significant surprise. This is because employment-related data is so crucial to predicting economic strength or weakness and the Fed is closely watching several indicators in the employment sector to determine their next move. Tomorrow’s reports will be posted before the markets open, so we will have those results before morning mortgage rates are issued. However, there is a good chance that they will be a non-factor in tomorrow’s pricing. If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now...       Alan Russell 161 South San Antonio Rd. | Los Altos, CA 95022 Ph: 650-947-2296 | Fax: 408-335-1118 alanrussell@princetoncap.com CLICK HERE TO STOP RECEIVING OUR REPORT