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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This week will likely prove to be very active in terms of mortgage rate movement due to the economic data and other events that are scheduled. There are six economic reports scheduled for release, but in addition to the data, another Federal Open Market Committee (FOMC) meeting will be held this week. Together, we have the makings of a potentially volatile week in the financial and mortgage markets.

There are two housing related reports scheduled for release this week, but neither is likely to cause any movement in mortgage rates. May’s New Home Sales will be released tomorrow morning while Existing Home Sales will be posted Tuesday morning. These reports give us a measurement of housing sector strength and mortgage credit demand, but usually do not cause much movement in mortgage rates.

Tuesday also brings us the first important report of the week with the release of June’s Consumer Confidence Index (CCI). The CCI is extremely important to the financial markets because it measures consumer willingness to spend, which is important because consumer spending makes up two-thirds of the U.S. economy. If it shows an increase in confidence from last month, we can expect to see the bond market falter and mortgage rates rise slightly. Current forecasts are calling for a reading 103.0, close to last month’s 103.2 reading.

The only relevant economic data scheduled for release Thursday is the final reading to the1st Quarter GDP and weekly unemployment claims. The GDP data is quite aged now (covers January through March) and will likely have little impact on the bond market or mortgage pricing unless it varies greatly from previous readings. Last month’s first revision showed a 5.3% rate of growth, but analysts are expecting to see an upward revision to 5.6%.

The FOMC meeting that began Wednesday afternoon will adjourn Thursday afternoon. It is widely expected that Mr. Greenspan and company will boost short-term interest rates at this meeting by another quarter point. But, as we have seen so many times in the past, it is the post meeting statement that often creates the most volatility in the markets. They could give an opinion of the overall economy, hinting at a possible future move or lack of one. Statements like these could cause a knee-jerk reaction in the markets and pos sibly mortgage pricing Thursday afternoon.

There are two reports due Friday morning. The first is the release of May’s Personal Income and Outlays data. This report gives us an indication of consumer ability to spend and current spending activity. Analysts are expecting to see an increase of 0.2% in income and a 0.4% rise in the spending portion of the report. Smaller than expected increases should be good news for the bond market and mortgage rates.

The second report of the day is the University of Michigan’s Consumer Sentiment Index’s final reading for June. Unless we see a significant change to the preliminary reading of 82.5, I expect this data to be a non-factor in the market.

Overall, tomorrow will likely be the quietest day of the week. The most active should be Tuesday or Thursday due to the importance of the data and FOMC meeting. Wednesday doesn’t have any factual data to be concerned with, but there is a 5 year Treasury Note auction that may lead to volatility in the bond market if investor interest is relatively strong or poor. Friday’s news could also affect mortgage rates, but likely not as much as earlier days.

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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