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Tuesday's bond market has opened in negative territory following unfavorable economic data and a positive opening in stocks. The stock markets are showing gains right out of the gate, but are well short of recovering yesterday's massive losses. The Dow is currently up 103 points while the Nasdaq has gained 30 points. The bond market is currently down 12/32, which should erase a small part of yesterday's afternoon gains. We still should see an improvement of approximately .250 of a discount point over yesterday's morning pricing. That is assuming though, that the stock markets remain near current levels this morning. If the major indexes move noticeably higher or lower before your lender posts today's rates, the size of the change may vary.

The Labor Department announced this morning that worker productivity fell 0.3% during the 2nd quarter and that unit labor costs rose 2.2%. The productivity reading was expected to come in with a 0.6% decline, while the labor costs were expected to show the 2.2%. At first glance, this data is fairly neutral or slightly negative for bonds due to the weaker than expected productivity. However, sizable revisions to the 1st quarter readings make the data clearly negative. Today's report showed that 1st quarter productivity was revised lower by 2.4% and that the labor cost reading was adjusted upward by 3.1%. Those changes raise future inflation concerns, making bonds less attractive to investors.

This morning's economic data was not some of the more important reports we see regularly. On a light day in a calm market, it can influence bond prices and mortgage rates. But the markets are looking past this data, to today's FOMC meeting adjournment. It will end at 2:15 PM ET, but there is practically no change of the Fed changing key-short term interest rates today. However, the pressure is on the Mr. Bernanke and friends to do or say something to help ease investor fears. Not that they will have a resolution yet, but the markets need something to hold on to. Something to alleviate the uncertainty that recent events have created in the markets. We should see some movement across the board (stocks, bonds and mortgage rates) this afternoon. Which direction each will head is anyone's guess, so keep an eye on the markets and phone number of your mortgage professional in hand.

There is no relevant economic data scheduled for release tomorrow, but we do have a fairly important Treasure auction that should be quite interesting. Look for an update to this report shortly after the markets have had an opportunity to react to this afternoon's Fed statement. We will address tomorrow's activities in that intra-day update.

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