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By James Brooks

Wednesday's bond market has opened in negative territory due to morning strength in stocks. The stock markets are showing sizable gains with the Dow up 128 points and the Nasdaq up 25 points. The bond market is currently down 8/32, but due to strength late yesterday, we may still see a slight improvement in this morning's mortgage pricing.

The Institute of Supply Management (ISM) posted their January manufacturing index late this morning, announcing a reading of 54.1. This was a bit lower than the 54.5 that was expected, making the headline number appear to be good news for the bond market. However, a fairly sizable downward revision to December's reading (53.9 to 53.1), means that the index rose more last month than many had expected it to. Therefore, we can consider the data neutral or slightly negative for bonds and mortgage rates.

This morning's ADP employment report didn't influence bond trading or mortgage rates. It is a private sector report that tracks client payroll data at the payroll processing company. It showed a sizable decline from December's increase, but was fairly close to what analysts were expecting to see.

Tomorrow morning has two pieces of economic data scheduled for release at 8:30 AM ET, but neither is considered to be highly important. The first is Employee Productivity and Costs data for the 4th quarter that tracks worker productivity. Higher levels of productivity allows the economy to growth with little inflation concern. It can cause some movement in the bond market, but should have a minimal impact on mortgage pricing. If it varies greatly from analysts' forecasts of a 0.7% increase, we may see some movement in mortgage rates. However, the markets will be much more interested in Friday's data, so a slight difference shouldn't cause a noticeable move in rates.

Also tomorrow, the Labor Department will give us last week's unemployment figures. They are expected to say that 375,000 new claims for unemployment benefits were filed last week, which would be a slight change from the previous week. Since this data tracks only a single week's worth of new claims, it usually takes a large and unexpected change for it to affect mortgage rates. However, with the monthly report coming Friday morning, a surprise number could cause more of a reaction than usual.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now.

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