This week brings us the release of seven economic reports for the bond market to digest. Three of them are considered to be of low importance and likely will have little impact on mortgage rates. With data scheduled for release each day, we may see an active week in the bond and mortgage markets.

The first data of the week comes tomorrow morning with the release of August’s Existing Home Sales report. The National Association of Realtors posts this data, giving us an indication of housing sector strength by tracking home resales in the U.S. It is expected to show a decline from July’s sales, however, this data is not considered to be of high importance to the bond market.

Tuesday’s important report is September’s Consumer Confidence Index (CCI). This Conference Board index will be posted at 10:00 AM and gives us a measurement of consumer willingness to spend. It is expected to show a sizable increase from last month’s reading, indicating that consumers are more likely to make large purchases in the near future. This is bad news for the bond market and mortgage rates. Analysts are calling for a reading of approximately 102.5, up from August’s 99.6. If we see a smaller than expected rise, we should see the bond market move higher and mortgage rates move lower Tuesday.

August’s Durable Goods Orders will be posted early Wednesday morning. This report gives us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. Current forecasts call for an increase in orders in the neighborhood of 0.8%. A larger increase could hurt bond prices and cause mortgage rates to rise Wednesday. However, a smaller than expected increase would indicate a weaker than expected manufacturing sector that should help push mortgage rates lower Wednesday.

Also Wednesday morning will be the release of August’s New Home Sales. It is expected to show that sales of new homes fell in August. Due to the importance of the Durable Goods Orders report and the fact that this data is usually not a major influence on mortgage pricing, I expect this release to be a non-factor in Wednesday’s mortgage rates.

Thursday’s data is the final revision to the 2nd Quarter Gross Domestic Product (GDP). Since this data is aged now and the preliminary reading of the 3rd Quarter GDP will be released next month, I don’t see this revision having much of an impact on the financial markets or mortgage pricing. It is expected to show no change from the previous estimate of a 3.3% annual rate.

There are two reports scheduled for release Friday morning. August’s Personal Income and Outlays and the revised reading to the University of Michigan’s Consumer Sentiment Index for September. The first will be released early morning and gives us an indication of consumer ability to spend and current spending habits. This is important to the markets because consumer spending makes up two-thirds of the U.S. economy. Rising income generally indicates that consumers have more money to spend, making economic growth more of a possibility. This is bad news for the bond market and mortgage rates because it raises inflation concerns, making long-term securities such as mortgage related bonds less attractive to investors. It is expected to show a 0 .3% rise in income and a 0.2% increase in spending.

The Michigan index measures consumer confidence and is believed to indicate future consumer spending strength. The preliminary release earlier this month revealed an 84.4 reading. Analysts are expecting to see a small upward revision, bringing the index around the 85.0 level. A lower reading should help improve mortgage rates Friday morning, depending on the results of the income and spending data.

Overall, this will likely be a fairly active week for mortgage rates. The most important day will either be Tuesday or Wednesday due to the importance of the date being posted those days. For the time being, I am shifting back to lock recommendations for the immediate and short-term periods. If this week’s data does indeed show weaker than expected results, I may shift to float across the board. Until we get those assurances, I am concerned that we may see pressure and profit-taking in bonds, possibly lead ing to higher mortgage rates in the immediate future.

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… This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

a la mode

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Wednesday’s bond market has opened fairly strong, continuing yesterday’s afternoon rally. The stock markets are showing small gains with the Dow up 12 points while the Nasdaq has gained 6 points. The bond market is currently up 14/32, which should improve this morning’s mortgage rates by approximately .125 - .250 of a discount point.

There is no relev ant economic news scheduled for release today, leaving the markets to trade off yesterday’s news. The 10-year Note auction was met with a strong demand, leading to afternoon buying in bonds yesterday and this morning. This means that investors have a good appetite for U.S. bonds, which should help prevent mortgage rates from moving much higher in the immediate future.

The next piece of data comes tomorrow morning with the release of August’s Retail Sales report. It will give us a measurement of consumer spending, which is very important to the markets because consumer spending makes up two-thirds of the U.S. economy. Current forecasts call for a 0.2% decline in sales last month after July’s 1.4% jump. If we see a higher level of spending than is forecasted, the bond markets will most likely fall and mortgage rates will rise. However, a weaker than expected reading could push bond prices higher and mortgage rates lower tomorrow.

We will also see weekly unempl oyment claims tomorrow morning, but I am not expecting them to affect mortgage rates. It is expected to show 315,000 new claims were filed last week, but with the sales report coming out at the same time this data should have no impact on bond trading or rates.



If I were considering financing/refinancing a home, I would…. Float if my closing was taking place within 7 days… Float 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… This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
 
a la mode

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This week brings us the release of several important economic releases for the bond market to watch. This will also be a shortened week in the bond market as a result of the Labor Day holiday next Monday. There are seven reports along with the minutes from the last FOMC meeting between tomorrow and Friday. This makes it quite likely that we will see a fair amo unt of volatility in the financial markets this week.

Tuesday brings us the first piece of data for the markets to digest. The Conference Board will post this month’s Consumer Confidence Index (CCI) at 10:00 AM. This index measures consumer willingness to spend, which is important because consumer spending makes up two thirds of the U.S. economy. A decline would indicate that consumers may not be making large purchases in the immediate future. That sign of economic weakness should drive bond prices higher, leading to lower mortgage rates Tuesday. It is expected to show a reading of 103.7, which would be lower than July’s 106.5.

Also worth noting about Tuesday is the release of the minutes from the last FOMC meeting. There is a pretty good possibility of the markets reacting to them following their 2:00 PM ET release, especially if they show some divisiveness by its members. It is already known that at least one member voted for another rate increase when the majority voted to not change rates at the last meeting. It will be interesting to see some of the Fed member’s views on the economy and inflation.

Wednesday’s only data is the first revision to the 2nd Quarter Gross Domestic Product (GDP). Last month’s preliminary reading revealed a 2.5 % pace, which was well below analysts’ forecasts. A downward revision should help lower mortgage rates Wednesday. However, an upward revision above the current forecast of 3.0% could lead to higher mortgage rates Wednesday. There will be a final revision issued next month, but it probably will have little impact on mortgage rates.

Thursday is another multi-release day with the release of July’s Personal Income and Outlays and Factory Orders The income and spending data measures consumer ability to spend and current spending habits. It is expected to show an increase of 0.5% in income and a 0.8% increase in spending. Weaker than expected numbers would be good news for t he bond market and mortgage rates.

The second report of the day is July’s Factory Orders data. This report measures manufacturing sector strength and is similar to last week’s Durable Goods Orders, but includes orders for both durable and non-durable goods. This data is expected to show a 0.5% increase in new orders. A smaller than expected rise should lead to lower mortgage rates Thursday, especially if the income and spending report reveals weaker than expected readings.

Friday is going to be a doosy of a day. There are three reports scheduled for release but two of them are highly important to the bond market and mortgage rates. The first is the most important of the three. The Labor Department will post the unemployment rate, number of new jobs added or lost and average hourly earnings for August early Friday morning. The ideal scenario for the bond market and mortgage rates is rising unemployment, a smaller than expected rise in new payrolls an d earnings to remain unchanged. If we are that fortunate, I expect to see mortgage rates drop considerably Friday morning. Analysts are expecting to see the unemployment rate slip back to 4.7% and 125,000 new jobs added.

August’s revision to the University of Michigan Index of Consumer Sentiment is also due Friday morning. It gives us a measurement of consumer willingness to spend. It is expected to show an increase from August’s preliminary reading of 78.7. If it revises lower, consumers were less confident about their personal financial situations than previously thought. This would be good news for the bond market and mortgage rates.

The Institute for Supply Management (ISM) will post their manufacturing index at 10:00 AM ET. This index measures manufacturer sentiment and is expected to show a small increase from last month’s reading of 54.7. A reading above 50 means that more surveyed manufacturers felt business improved during the month than those who felt it worsened. A larger increase in the index would probably cause a rally in the stock markets and lead to mortgage rates rising Thursday, while a reading below 55.0 should lead to lower rates.

Overall, it is a shortened week but probably will be a very busy week. The bond market is expected to close at 2:00 PM ET Friday ahead of the Monday holiday. We will likely see the most activity in rates Friday morning, but Tuesday and Thursday are also important. If we manage to get weaker than expected results in the CCI, Employment and ISM reports, we should see mortgage rates close the week lower than tomorrow’s opening levels.

If I were considering financing/refinancing a home, I would…. Lock if my closing was taking place within 7 days… Float 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… This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

a la mode

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