Mortgage Rates at Highest Levels in Two Weeks

Mortgage rates were at their highest levels in more than two weeks as we saw more weakness in the bond and mortgage markets.  There is little likelihood that interest rates will improve this week with employment data coming on Friday.

This morning the September ISM manufacturing index returned to the positive after the August index dropped slightly into contraction at 49.4.  New orders lead the September report, and Export orders were respectable and steady, while the draw in total backlog orders slowed.  Production also improved in the month, as did employment.

Another manufacturing report was not as kind as the ISM’s data. New orders slowed to the weakest growth rate of the year while export sales contracted for the first time in four months which the report ties to strength in the dollar. Production slowed to a 3-month low, hiring during the month was soft, and the sample continues to cut inventories which indicates lack of confidence in the business outlook.

August construction spending is weak and has been for most of Q3 - August was expected up, but came in downward with revisions also put back into July.  Construction spending on new single-family homes fell for the third monthly contraction in a row.

No data tomorrow but Fed officials will be out and ranting.  Look for another quiet session tomorrow. Employment and uncertainty over conflicting economic releases should keep investors and those money managers from making any huge decisions. Then everyday gets closer to the election and the Next debate on Oct 9th. Going to get real messy.

In summary, September has passed, and potentially Deutsch Bank's immediate liquidity woes as well.  Bond markets were (surprise) flat today.  The only immediate motivation for floating I see is Euro angst, and some of that is already priced into current rates.  Locking here would not be a mistake, especially if closing in October.