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Mortgage rates edged lower today as investors reacted to economic data that showed contraction in the manufacturing sector. The Institute for Supply Management (ISM) publishes a monthly index for both the manufacturing and non-manufacturing sectors. Aside from the most hyped economic reports (like this Friday’s jobs report or next week’s Consumer Price Index), few other reports have the same potential to influence interest rates.
Of the two, the non-manufacturing version has the bigger impact, but today’s was no less so. It showed bearish numbers across the board (activity, orders, jobs and even prices). A weak economy is always good for interest rates, but this report had the added benefit of showing lower prices at a time when the market was looking for evidence of quieter inflation.
After the release of the data, the bond market swung from negative to positive territory. Translation: rates went down (because the value of a bond increases inversely to its yield/rate). This was more pronounced in US Treasuries, but mortgage-specific bonds also improved.
With this, the average mortgage lender was able to drop rates to just a hair higher than the March 23-24 lows. You’ll have to go back on February 3rd to watch anything less. With today being April 3rd, that means we are at a 2 month low.
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