Market Analysis

Due to my being out of the office yesterday for much of the day yesterday, today's update also serves as yesterday's beginning of week update.

Mortgage rates inched up slightly yesterday and again today.  Yesterday investors responded to the Institute of Supply Management manufacturing index for July which increased to 48.9 from 44.8 in June. This is the highest reading for this index since August 2008.  Today bonds began the day a bit better on news that Consumer income had dropped 1.3% (a 1% drop was expected) but bonds turned for the worse as investors responded to a stronger than expected June pending home sales report from the National Associaton of Realtors.  Sales of previously owned homes rose 3.6%.  This is the fifth straight month for pending sales to increase.  It has been six years since that long of a string of increases has occurred. 

Below are the key economic reports for this week:

Monday

July Institute of Supply Management Index - expected increase to 46.2, actual increase to 48.9.

Tuesday

June Personal Income, Spending and PCE Index - personal income was expected to drop by 1%.  It dropped by 1.3%.  Spending was expected to increase by .3%.  It increased by .4%.  The PCE (personal consumption expenditure index) came in at .2% increase which met analysts projections.

Wednesday

June Factory Orders - expected up .2%

July Institute of Supply Management Service Sector Index - expected up to 48.2 vs last month 47.0

Thursday

Initial Jobless Claims for the week ended 8/1 - expected up 16,000 

Friday

July Nonfarm Payroll, Jobless Rate, Avg Hourly Earnings - payrolls expected dow by 340,000, jobless rate expected up to 9.7% vs last month 9.5% and average hourly earnings expected up .1% vs no change last month.