Treasury yields rose yesterday, with the 10 year note rising 10 bps from its intraday low yield of 2.14% up to 2.24% by the close. Pricing on mortgages kept pace with Treasuries, falling .375% to .50% by the close of trading, forcing lenders to reprice for the worse mid-day.
Economic data this morning reflects an economy that continues to weaken. The ISM manufacturing report did not dip below 50.0 as was expected in August, but did decline from 50.9 to 50.6, with the majority of the underlying components contracting.
Initial jobless claims remain above the 400,000 mark. For the week ending August 27 new claims were 409,000, and the four week moving average of claims rose from 408,500 to 410,300.
On the productivity front, nonfarm productivity dropped in the second quarter by 0.7%. This is a data point the Fed watches as weaker productivity implies higher costs to produce a product or service, or said another way, inflationary pressures. Unit labor costs rose from 2.2% to 3.3% for the quarter.
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