Mel's Blog

Friday's bond market has opened in positive territory, allowing mortgage rates to recover part of this week's losses. The stock markets are showing small gains with the Dow up 25 points and the Nasdaq up 3 points. The bond market is currently up 17/32, which will likely improve this morning's mortgage rates.

None of today's three economic reports gave us any major surprises. The Labor Department said that the 3rd Quarter Employment Cost Index (ECI), which tracks employer costs for salaries and benefits, rose 0.7% last quarter. This was expected and has not had much of an influence on the markets.

September's Personal Income and Outlays report revealed a 0.2% rise in income and a 0.3% decline in spending. The income reading was slightly higher than expected, meaning that consumers had a little more income to spend that thought. The drop in spending was bigger than forecasted, meaning consumers were spending less than thought. The income reading can be considered negative news for bonds, but the drop in spending offsets that news. Therefore, this report also failed to push the markets either way.

The week's last report was the University of Michigan's revision to their Index of Consumer Sentiment for this month. It showed a reading of 57.6 that nearly matched forecasts of no change to the 57.5 preliminary reading. Again, this data had little impact on the markets and mortgage rates.

Next week is fairly active in terms of economic releases for the markets to digest. Monday brings us the first with the release of the Institute for Supply Management's manufacturing index. This is usually the first report we see each month and is considered to be pretty important. It is expected to show that manufacturer sentiment slipped further in October.

The rest of the week also brings us some important data including October's employment numbers next Friday.

                   Mel