Daily Commentary by Larry Baer: The
Institute of Supply
Management touched off a round of impressive
fireworks in the mortgage market this morning when they reported their manufacturing
index unexpectedly plunged to a reading of 49.7% in June - the lowest mark in
nearly three-years. The vast majority
of economists had projected the index would post a reading of 52.0% or so -
only slightly softer than May's 53.5%.
This morning's ISM data meshed with similar
survey's released today in Europe, China
and Japan
showing they too are experiencing their own sharp declines in manufacturing
activity.
The implication here is for very soft
domestic and global economic growth in the second-half of the year - an outlook
that re-enforces the near-term prospects for steady to perhaps fractionally
lower mortgage interest rates from your investors.
Looking ahead to the balance of this holiday
shortened week - still to come are Tuesday's May Factory Orders figures,
Thursday's weekly jobless claims number and June ISM Service Sector Index. All three of these reports will be sharply
overshadowed by the release of the June Nonfarm Payroll data on Friday morning. Your current rate sheets almost fully reflect
mortgage investors' expectation that the headline June Nonfarm Payroll figure
will post a puny 90,000 net new job gain number. The national jobless rate is expected to
remain unchanged at 8.2%. Only in the
highly unlikely event June Nonfarm Payrolls were to exceed 125,000 and/or the
national jobless rate posted a reading of 8.0% or less will mortgage investors
likely respond by pushing interest rates notably higher.
THE
MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
