Daily Market Update 9/2/10

Mortgage rates inched higher Friday as stronger than expected employment data boosted stocks and pushed mortgage-backed securities (MBS) lower. The economy lost 54,000 jobs in August, less than forecast. The June and July employment figures were revised upward as well. The Unemployment Rate rose to 9.6%, in line with expectations. Average Hourly Earnings, a proxy for wage growth, rose 0.3%, beating the consensus forecast of 0.1%. MBS prices recovered somewhat after the Institute for Supply Management services index reading came in lower than expected, at 51.5. Readings above 50.0 indicate expansion in the services sector of the economy. Next week will be relatively light in terms of new data. Investors are likely to focus on the three large Treasury auctions of 3-, 10-, and 30-year securities next Tuesday, Wednesday, and Thursday. Also on Thursday, the Fed's Beige Book will be released, a survey of economic activity by its twelve regional banks. No other key data will be released today.