Tuesday's bond market has opened in negative territory following early stock gains. The stock markets are starting this shortened week with strong gains as the Dow is up 97 points and the Nasdaq is down 1.87 points. The bond market is currently up 19/32, an improvement from this mornings negative opening.

The Institute for Supply Management posted their manufacturing index late this morning, showing a reading of 49.9. This was very close to last month's reading and slightly higher than forecasts, but has not had much of an influence on this morning's trading or mortgage pricing.

Tomorrow morning brings us the release of July's Factory Orders data. This report measures manufacturing sector strength and is similar to last week's Durable Goods Orders, but includes orders for both durable and non-durable goods. This data is expected to show a 0.4% increase in new orders. A smaller than expected rise should lead to lower mortgage rates Wednesday.

Also scheduled for release tomorrow is the Federal Reserve release of its Beige Book report. This report details current economic conditions in the U.S. by region. It is believed to be a key source of data when the Fed meets for their FOMC meetings. It is usually released approximately two weeks prior to each FOMC meeting. If the 2:00 PM ET release reveals any significant surprises, we may see movement in the markets and mortgage pricing as analysts adjust their theories on the Fed's next interest rate move. Most likely though, it will be a non-event and will not lead to a change in mortgage rates.

Overall, I expect to see the most movement in rates Friday due to the importance of the Employment report. I am holding the short-term lock recommendations for the time being, but this does not mean that I think rates will necessarily move higher. It means that I feel the risk verses the potential reward of continuing to float an interest rate is leaning heavily towards the risky side. Accordingly, locking seems to be the prudent position at this time if closing in the immediate future.

                   Mel