Yesterday, mortgage backed securities had an uneventful day.   Consumer mortgage borrowing costs should be more or less unchanged from yesterday.  This will keep par 30 year conventional mortgages in the range of 4.5% to 4.75% for the most qualified borrowers.

Today we received a hefty amount of economic data, most of which was overlooked by market participants. This was not unexpected when you consider the most important economic indicator is due out on Friday....Non Farm Payrolls: The Employment Situation. Remember bad economic data is usually considered to weaken stock markets and strengthen fixed income securities, such as MBS. However, this was not the case for stocks yesterday as the US stock market managed to close almost 100 points higher even though economic data was fairly negative.  Stock traders instead decided to focus on some optimistic banking news from the Europeans and some US supportive verbiage from the World Bank . This just shows us how unpredictable all markets are at the moment.  I would not make that assumption on Friday morning though; markets will be paying very close attention to labor market data

While on the subject of jobs numbers, today we did receive the ADP Employment report.   This report is released on the Wednesday before the official government numbers are released on Friday.  Historically, this report's use as an accurate predictor of Non Farm Payrolls has been called into question as it only covers private payrolls and excludes government jobs.   According to ADP, our economy lost 742,000 jobs last month which s about 100,000 higher than economist estimates.  Friday’s government numbers are expected to show a loss of 650,000.

There were several other economic reports issued today as well.

The ISM Manufacturing Index.  This is a survey of more than 300 manufactures which measures the strength of the manufacturing segment of our economy.  Readings below 50 indicates a contracting economy, while readings over 50 indicate an expanding economy.  Economists expected this report to come in at a 36.0. The actual reading came in slightly better at 36.3, the highest level since November 2008 (36.6). Only two components showed decreases from the prior month, the fewest since May 2008. Inflation pressure rose slightly but remains extremely low, as the prices paid index rose to 31.0 from 29.0.

Total US construction fell 0.9% in February, although better than economists expected this is the lowest level since March 2004 and the fifth consecutive month of declines  Construction Spending was boosted by the first gain in private non-residential construction in five months. Total private construction fell 1.6%, its lowest level since June 2003. All of that 1.6% decline was in residential construction which fell by 4.3%, the lowest level since December 1997. Year over Year homebuilding has fallen an unadjusted 30.1%.

Pending home sales, a leading indicator of housing activity developed by the National Association of Realtors.  A pending home sale is one in which a contract has been signed but the loan has not closed.  With much tighter underwriting standards, many more loans are being denied by lenders so investors mainly use this report for a gauge on the demand for housing. The National Association of Realtors' reported that the pending home sales index  rose to 82.1 in February. which was relatively close to economist expectations. Some positives can be taken from this data in the fact that this an improvement from the 80.4 reading in January. Year over year the index is 1.4% lower than the February 2008 reading.

Reports from fellow mortgage professionals are indicating that lender rate sheets are mostly unchanged from yesterday. The MBS commentary has some interesting commentary on lender's locking their loans this morning. As it reads, if lenders are locking in their loans at MBS price highs this would imply that they will have room to continue to offer record low mortgage rates. Check it out if you are curious: MBS Commentary.