Daily Commentary by Larry Baer: Activity
in the manufacturing sector of the economy unexpectedly gained momentum in
April. The private Institute
of Supply Management said
its index of national factory activity rose to 54.8 from 53.4 in March, sharply
exceeding economists' consensus estimate calling for a reading of 53.0%. The components of the report were
surprisingly strong as well - new orders climbed to 58.2 from 54.5, while the
employment index improved to 57.3 from 56.1.
This data was inconsistent with more recent regional reports indicating
manufacturing activity, with accounts for about 12% of the total economy, has
begun to cool noticeably. The ISM
headline was far enough off the expected target that mortgage investors choose
to retreat to the sidelines and let rate sheet prices edge a bit lower in
today's early going. With Friday's
nonfarm payroll looming ever larger on mortgage investors' minds - the likelihood
of a move to lower mortgage interest rates before the numbers are released at
8:30 a.m. ET are growing increasingly dim.
Market
participants are currently anticipating the economy created 175,000 net new
jobs in April - a nice improvement from the 120,000 gain registered in March -
but still well below the 250,000+ pace necessary to just keep up with the
number of new entrants into the workforce.
If the actual number matches or closely approximates the consensus
estimate -- mortgage interest rates will likely remain fairly steady at current
levels. In the off-chance the actual
headline number exceeds 200,000 -- look for surprised mortgage investors to
react by pushing rates aggressively higher.
THE
MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
