Monday 11/3 ... Preview of Upcoming Week

By: Matthew Graham •

This week brings us several big economic reports with the biggest ones being released on Friday.

Today we get the release of 2 reports:
1. The ISM Index, which is a survey of purchasing managers and is seen as the best indicator of the condition of the manufacturing segment of our economey. Readings above 50 indicate our economy expanding, and below 50 indicates contraction. Economist's are expecting a reading of 42.0 after last months reading of 43.5.
2. Construction spending is expected to come in at -.8% after last months flat reading of 0.0%.

Tuesday
1. Factory orders, economists are expecting a drop of -1.5% after last months -4.0% drop.
2. We also get the Presidential election, please make sure you get out and vote!!

Wednesday
1. ADP employment Report, which is estimating that our economy lost -80,000 jobs. This report is not as important as the non-farm payrolls which is released Friday as this report is historically off. For example, last month this report estimated a -8,000 drop in jobs but the actual government number came in at a -159,000. Even though this report is not very accurate, investors will pay it some attention.
2. ISM Services Index, which is similar to the ISM index but this one measures the non-manufacturing segment of our economy. This report is expected to come in at 48.5 after last months 50.2 reading.

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Thursday
1. Jobless claims, economists expecting 480,000 after last weeks 478,000 claims.

Friday
1. Unemployment rate, economists expecting an increase in the rate from 6.1% to 6.2%.
2. Non-Farm Payrolls, economists expecting a decrease in jobs of 198,000. This report is probably the single biggest report released each month and will move the markets. Higher unemployment, leads to less wage based inflation which is positive for mortgage rates.
3. Hourly earnings, economists expecting a .3% increase in earnings.


So far this morning, mortgage backed securities are improved from last weeks close, but the day is young is volatility is likely to be seen. On Friday, our mbs' were up dramatically in the morning, just to give back all the gains by close. When viewing the release of the economic reports, remember that weaker economic reports are generally a postive for mortgage rates.