Mixed Reports Leave Bond Markets Relatively Unchanged; March 6, 2006
6 March 2007
The stock marketsﾃつ opened strongly today with the Dow up over 60 points, and theﾃつ bond market down 1/32ﾃつ .ﾃつ Rates today are likely to stay unchangedﾃつ or possiblyﾃつ slightly increase.
Today’s report on worker productivity from the Labor Department was down toﾃつ 1.6% annual rate during the 4th quarter of 2007, slightlyﾃつ lower than forecasts.ﾃつ Lowerﾃつ than expected labor productivty translatesﾃつ into concerns about higher labor costs andﾃつ eventually the risk of inflation.
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January Factory Orders report released today showed a sharp decline from expected.ﾃつ The posted 5.6% decline was the steepest drop in one month since July 2000.ﾃつ This report tells us that manufacturing activity may be rapidly declining, suggesting a slowing economy.ﾃつ This is good news for lower mortgage rates and stronger bond prices.
Tomorrw the Fed Beige Book will post at 2pm EST.ﾃつ ﾃつ This report outlines economic activity throughout the United States by region.ﾃつ This report is of note because the Fed uses this data in their FOMC meetings, so it could cause enough movement in the bond market to affectﾃつ rates if the report gives us any surpise.ﾃつ
For those considering locking in for the next 60 days, I would recommend to lock now.ﾃつ ﾃつ ﾃつ The likelihood that rates could increase currently outweighs the likelihood of rates declining.
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