Last week the market shocker was some manufacturing data that blew away what most were expecting. This caused interest rate pricing (the credit you get for a specific rate) to deteriorate a little during the last half of the week. This week the big news will be the October employment report of Friday. As of now the market is expecting the data to be bad with a reading of +130k new jobs, so a bad report is already being priced in to the current bond pricing. If the data is even worse we could see rates improve a bit more, maybe taking us back to where we were a week ago before the positive manufacturing data. But if the data isn’t as bad as everyone thinks then bond pricing will correct and rates edge up a bit. We will also be keeping an eye on 3rd quarter GDP data on Thursday, which is expected to have dropped to around 2% from the prior quarter reading of 2.5%. Doom and gloom bond pricing has somewhat returned to the markets over the last month. If the data starts to improve, which would be a shock, expect interest rates to move back up pretty quick. Otherwise, look for poor economic data to keep us in the low 4’s for awhile (what i’m expecting).
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