Weekly Mortgage Overview: 6/3/2013

This Week: a Number of Key Data Points

The May employment report on Friday is the major release. After the strong April data last month that started the relentless increase in interest rates, markets will know whether it was a one-off report or the beginning of increasing hirings. Also this week, beginning on Monday with the ISM manufacturing index and through the rest of the week, each day will have data that is significant. On Wednesday the employment concerns will begin in earnest when ADP releases their number on non-farm private jobs; going into the week the estimate for ADP is an increase of 157K jobs after reporting only 119K in April.

 Another reminder, do not fight the tape. Interest rates show little evidence of any improvement as the week begins. The 10-year note may move to 2.25% before there is any interest from investors to buy fixed income treasuries or MBSs. Monday at 10:00 the May ISM manufacturing index is expected at 50.9 from 50.7 in April, not much if that is all there is. Manufacturing continues to be a drag on the economy. No stopping the equity markets these days; as long as the stock market continues its march higher there isn’t much to hope for in the bond and mortgage markets. The end has come for the rate markets, although at some level we expect there will be some interest in treasuries; what level is the unanswered question.