Updated on April 1, 2025 10:16:00 AM EDT

The Institute for Supply Management (ISM) kicked off this week's economic calendar with the release of their manufacturing index for March. They announced a reading of 49.0 that fell short of the 49.6 that was expected. More importantly, it came in below the 50.0 threshold that is considered to be a sign of contraction in the sector and fuels concerns about growth in the broader economy. Weaker economic conditions make bonds more appealing to investors, usually leading to lower mortgage rates.

Tomorrow has several events scheduled that we will be watching. It will start with the first of two morning economic reports being released. That will be the March ADP Employment report at 8:15 AM ET that estimates the number of new private-sector jobs added to the economy. As with any employment-related data, it will draw some attention, but many people feel this report is given more than it really deserves. Some people try to use it to predict the monthly government figures that follow a couple of days later, usually without success. Still, if it shows a noticeable variance from expectations, it will likely cause movement in the markets and mortgage rates. Forecasts are calling for it to show 120,000 new private-sector payrolls. Good news for rates would be a much smaller number.

February's Factory Orders report will be posted at 10:00 AM ET tomorrow. It is similar to last week's Durable Goods Orders data in giving us a measurement of manufacturing sector strength, but this version includes new orders for both durable and non-durable goods. It is not one of the more important reports we get each month, however, it can influence mortgage pricing if it varies greatly from forecasts. Analysts are expecting a 0.5% rise in new orders, indicating weakness in the manufacturing sector. The bond market would like to see a large decline, meaning that manufacturing activity was weaker than many had thought.

Also tomorrow is President Trump's Liberation Day of tariff announcements. He will be holding the relevant press conference tomorrow where he is expected to announce a wide arrange of tariffs on different products and materials coming in the U.S. The markets don't know what to expect as his exact plans are secret for the time being. It is hard to tell how they will react. Generally speaking, tariffs on the strong side should cause stock selling and a bond rally that leads to an improvement in mortgage pricing. Over the mid and long-term, higher tariffs are going to be an inflation concern for the bond market that could be troublesome for mortgage rates. That said, they are expected to hurt the economy, possibly leading to a recession here in the U.S. Whether or not that is an accurate prediction, it is mindset of market traders today. This is why softer than feared tariffs could lead to stock gains and bond selling tomorrow.

Finally, Vice Chair Jefferson is speaking virtually at 4:30 PM ET tomorrow. The topic of his speech is labeled “Inflation Expectations and Monetary Policymaking”. These are two hot topics for the financial and mortgage markets, meaning we may see a reaction during evening trading and Thursday's open. This appears to be the first important Fed speech of the week, but there are more coming Thursday and Friday also.

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