Mortgage investors have completely shrugged-off this morning's stronger-than-expected decline in the weekly jobless claims number and the better-than-anticipated Institute of Supply Management Manufacturing Index. The near-term trend trajectory of mortgage interest rates is now leaning entirely on tomorrow morning's 8:30 a.m. ET release of the August Nonfarm Payroll figures.



The majority of economist are projecting the headline nonfarm payroll number will fall within shouting distance of 80,000 and the national jobless rate will remain at its current 9.1% level. These expectations are already well priced into the mortgage market. Numbers that match or exceed the current consensus estimate will probably exert upward pressure on mortgage interest rates -- while a headline number less than 75,000 and/or a jobless rate of 9.2% or higher will almost certainly prove supportive of fractionally lower rates before the day is over.



While lower rates are certainly welcome by borrowers and mortgage originators alike -they don't do much for the end investors. Yields to investors are approaching the point where they don't offer a return much greater than what the investor could get by simply stuffing their money under the mattress. The "so what" factor here is worth noting. At some point - from the investors' perspective - accepting lower yields on their mortgage portfolio becomes pointless - or dangerous - or both. Against this background it will not take much in the way of an inflation spike or signs of an accelerating economic recovery to prompt a dramatic upward surge in note rates.



FYI: The mortgage market will operate on a normal schedule on Friday, September 2nd and will be closed on Monday, September 5th for the Labor Day Holiday.