October 30th, 2009 12:43 PM by Mel Samick
Friday's bond market has opened in positive territory after this morning's economic data failed to show any significant surprises and the stock markets opened with losses. Stocks are starting the next leg of their recent roller coaster ride with sizable losses. The Dow has given back yesterday's rally with a loss of 238 points so far. The Nasdaq is not fairing much better with a 50 point loss. The bond market is currently up 44 basis points.The first of today's three reports was the 3rd Quarter Employment Cost Index (ECI). It showed an increase of 0.4% that matched forecasts. This means that employer costs for wages and benefits rose moderately during the third quarter, but this was expected. Therefore, its' impact on today's trading and mortgage rates has been minimal.September's Personal Income and Outlays report was the second, revealing no change in personal income last month and a 0.5% decline in spending. These figures pegged analysts' expectations and also have not influenced today's mortgage pricing.The third and final report of the day was the University of Michigan's update to their Index of Consumer Sentiment for October. They announced a reading of 70.6 that exceeded forecasts of a 70.0 reading. This means that consumers were a little more optimistic about their own financial situations than many had thought. That can be considered bad news for bonds but since this data is only moderately important, it fortunately has been unable to prevent bonds from rising this morning.Yesterday's 7-year Note auction was met with an average demand. It can't be considered weak or strong. Some of the components that measure the success of the sales pointed towards less interest than Wednesday's auction, but not by enough to cause much concern. Next week is extremely busy in terms of economic reports being posted. Unlike many, we will see important data posted this Monday. The Institute for Supply Management (ISM) will post their manufacturing index late Monday morning. It is considered to be one of the more important reports we get each month, but it will not be the most important data next week. In addition the data, that includes the monthly employment figures, we also have another FOMC meeting to watch for.