February 1st, 2010 5:35 PM by Mel Samick
Monday's bond market has opened well in negative territory following stronger than expected economic reports. The stock markets are starting the week in positive ground. The bond market is currently down 17/32, but due to strength late Friday we will see little change to this morning's mortgage rates compared to Friday's morning rates.There were two relevant reports posted this morning. The first was January's Personal Income and Outlays data early this morning. It showed a 0.4% increase in income and a 0.2% rise in spending. The income reading was stronger than expected, but the spending increase fell short of forecasts. Therefore, this report can be considered neutral for mortgage rates.The second report of the day was the Institute of Supply Management's (ISM) manufacturing index. This index tracks manufacturer sentiment by rating surveyed trade executives' opinions of business conditions. It showed a reading of 58.4 that was well above what analysts were expecting to see. This means that more surveyed manufacturers felt business had improved last month than the previous month, indicating a strengthening manufacturing sector. This can be considered bad news for bonds and mortgage rates.There is no relevant economic data scheduled for release tomorrow, but we do have two speaking engagements to watch. Treasury Secretary Geithner will speak before a Senate Finance Committee at 10:00 AM ET regarding the U.S. budget. At the same time, Paul Volcker who is the Chairman of the President's Economic Recovery Advisory Board, will testify to the Senate Bank Committee about high-risk banking activities. Since the government bonds are highly involved in the economic recovery and budget issues, these speeches may affect the markets if something unexpected is said. This could be positive or negative for bonds and mortgage rates, but are worth watching.