Forecast for the Week: The Jobs Report for May could be a market mover. Plus, news on manufacturing and productivity.

As your mortgage professional, I am posting the MMG WEEKLY because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you.

The labor market will be front and center this week, with May’s Jobs Report headlining several important releases.

  • The closely-watched ISM Index will be released on Monday, bringing key news for the manufacturing sector. Look for the ISM Services Index on Wednesday.
  • Wednesday also brings Productivity for the first quarter of 2014, and private payroll numbers from the ADP Employment Report.
  • Weekly Initial Jobless Claims will be delivered on Thursday.
  • That leads us to Friday, when one of the most closely-watched economic reports will be released—the Jobs Report for May, which features Non-farm Payrolls and the Unemployment Rate.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.

When you see these Bond prices moving higher, it means home loan rates are improving—and when they are moving lower, home loan rates are getting worse.

To go one step further—a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, Mortgage Bonds hit 2014 highs, though news on inflation helped cap some of these gains. Home loan rates are at some of the best levels we’ve seen in months, and I’ll be watching them closely in the weeks ahead.

Chart: Fannie Mae 4.0% Mortgage Bond (Friday May 30, 2014)

Japanese Candlestick Chart
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