Mortgage rates moved in the wrong direction last week, and ticked up by .125% -.25% in the aftermath of the Fed rate cut.
Though the mortgage bond market (from which mortgage rates are derived) would normally benefit from a series of negative reports on the economy like we had last week, the coordinated global rate cutting and mild post-Fed rally in stocks kept a lid on any potential improvement in rate.
The biggest event on the economic calendar is the October employment report, which prints on Friday at 8.30 AM, and will give further insight into how bad the national employment picture is.
Our economy has shed something like 750,000 jobs in 2008, and Friday's report holds the possibility that the US has crossed over the psychologically important threshold of 1 Million jobs lost.
As we write this, the ISM index, measure of manufacturing sector health, has published at 38.9 (above 50 is expanding, below 50 is contracting) which is a deeply recessionary number and the worst such reading since 1982.
Conventional wisdom tells us that what is bad for the economy is usually good for mortgage rates, though (as we have noted in this space before) that correlation has broken down of late for reasons too numerous and foggy to break down here.
Suffice to say that as long as the financial markets remain in a state of flux, "normal" behavior in the bond markets will be hard to find, and rates may ping about unpredictably.
This Week's Economic Calendar [Barron's]
Watching Mortgage Rates? Get live updates on intra-day changes to the mortgage market, and other factors that impact rates via the Web, IM, or your phone by subscribing to our Twitter feed.