By James Brooks

The bond market is down 1/32 (2.37%), but we still should see a slight improvement in Raleigh area mortgage pricing due to strength late yesterday.

This first of today's economic releases was the 3rd Quarter Employment Cost Index (ECI) at 8:30 AM ET. It showed a 0.7% increase, exceeding forecasts of 0.6% rise. This means employer costs for wages and benefits rose slightly more than expected during the July - September months. While this is considered a sign of wage inflation, making the data bad news for mortgage rates, it came from a moderately important release and had only a minor variance from forecasts. Therefore, it has had little impact on today's mortgage pricing.

Also released today was October's Consumer Confidence Index (CCI) 10:00 AM ET. The Conference Board announced a reading of 125.9 that was well above the 121.5 that was expected. That indicates surveyed consumers were much more optimistic about their own financial situations than many had thought. Because rising confidence usually translates into stronger levels of consumer spending, this is also unfavorable news for the bond market and mortgage rates.

Tomorrow starts with two morning economic releases, one of which is very important. The first is the ADP Employment report before the markets open. It has the potential to cause some movement in the markets if it shows much stronger or weaker numbers than expected. This report tracks changes in private-sector jobs, mostly of ADP's clients that use them for payroll processing. While it does draw attention, it is my opinion that it is overrated and is not a true reflection of the broader employment picture. It also is not accurate in predicting results of the monthly government report that follows a couple days later. Still, because we have seen reaction to the report, we should be watching it. Analysts are expecting it to show that 217,000 new payrolls were added. The lower the number of jobs, the better the news it is for mortgage rates.

The second and more important report of the day will be the Institute for Supply Management's (ISM) manufacturing index for October at 10:00 AM ET. This index measures manufacturer sentiment, which is important because it gives us an indication of manufacturing sector strength. It is considered to be one of the more important reports we see each month, partly because it is the first every month that tracks the preceding month's activity. Tomorrow's release is expected to show a reading of 59.3, indicating that manufacturer sentiment slipped from September's level 60.8. This means fewer surveyed manufacturing executives felt business improved during the month than in September, hinting at weaker manufacturing sector activity. A smaller than expected reading would be good news for bonds and likely lead to lower mortgage rates.

Also tomorrow is adjournment of this week's FOMC meeting that began today. It is widely expected that the Fed will not make a change to key short-term interest rates. Chairperson Janet Yellen and friends have indicated they expect to make a rate hike before the end of the year, but it would come as a major surprise if it came at this meeting. That means that market participants are expecting it to come during December's meeting. The meeting will adjourn at 2:00 PM ET and does not include economic projections or a press conference. These meetings normally have a strong likelihood of causing volatility in the markets. However, I believe this one will have less of an impact than usual unless there is a surprise in talk of the Fed's balance sheet reduction plan.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now.