Adam in CO
07-24-2006, 02:47 PM
This week is packed with economic data for the financial and mortgage markets to digest. In addition, several of the reports are considered to be of extremely high importance to the financial and mortgage markets. This makes it quite possible that mortgage rates will show considerable movement again this week.
The first important report comes Tuesday morning when the Conference Board will post their Consumer Confidence Index (CCI). This index measures consumer sentiment, giving us an idea of consumer willingness to spend. This is important because consumer spending makes up two-thirds of the U.S. economy. If the CCI reading is weaker than expected, we may see bond prices rise and mortgage rates drop Tuesday. Current forecasts are calling for a reading of 104.8, which would lower number than June?s reading.
The Federal Reserve will release its Beige Book report Wednesday afternoon. This report is named simply after the color of its cover, but it is considered to be important to the Fed when determining monetary policy during their FOMC meetings. It details economic activity and conditions by region throughout the U.S. With Fed Chairman Ben Bernanke?s testimony last week, I don?t think we will see any significant surprises in this report, and therefore will likely not cause much movement in mortgage rates Wednesday afternoon.
Thursday morning?s economic data will come from the Commerce Department when they will post June?s Durable Goods Orders at 8:30 AM ET. Current forecasts are currently calling for a gain of 1.7% after showing a slight loss in new orders during May. This data gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items. These are products that are expected to last at least three years. A stronger than expected number may lead to higher mortgage rates Thursday morning. If it reveals a decline, mortgage rates should drop Thursday morning.
Friday?s first release is the 2nd Quarter Employment Cost Index (ECI) that measures employers? costs for wages and benefits. It is considered to be an important measurement of wage inflation and can have a pretty big impact on the bond market and mortgage rates. If it shows a rapid increase, raising inflation concerns, the bond market may drop and mortgage rates rise.
Friday morning also brings us the release of the single most important report we see regularly. The quarterly Gross Domestic Product (GDP) is considered to be the best indicator of economic growth. It is the sum of all goods and services produced in the U.S. and usually has a great deal of influence on the financial markets. Current forecasts are estimating to see a 3.1% pace. A larger increase would probably boost stock prices and hurt bond prices, leading to higher mortgage rates. But a smaller increase would likely fuel a bond market rally.
Also being released Friday is the final revision to July?s University of Michigan Index of Consumer Sentiment. Unless we see a drastic revision to the preliminary estimate of 83.0, I think the markets will probably shrug this news off due to the importance of the GDP.
The week?s data is rounded off with two housing sector related releases Tuesday and Thursday, but I don?t think they will have much of an impact on the bond market or mortgage rates. June?s Existing Home Sales will be posted Tuesday while New Home Sales will be released Thursday. I would expect that other reports or factors will drive bond trading and mortgage pricing more than these will.
Overall, this is another huge week for the bond market and mortgage rates. If we get weaker than expected economic results, we may see mortgage rates make another leg lower. However, stronger than expected results will likely lead to higher rates for the week. With the bond market near the bottom of its recent trading range, I am holding the lock recommendations for immediate and short-term periods. I suspect that we may see some profit taking by traders, which could drive bond yields and mortgage rates higher.
The first important report comes Tuesday morning when the Conference Board will post their Consumer Confidence Index (CCI). This index measures consumer sentiment, giving us an idea of consumer willingness to spend. This is important because consumer spending makes up two-thirds of the U.S. economy. If the CCI reading is weaker than expected, we may see bond prices rise and mortgage rates drop Tuesday. Current forecasts are calling for a reading of 104.8, which would lower number than June?s reading.
The Federal Reserve will release its Beige Book report Wednesday afternoon. This report is named simply after the color of its cover, but it is considered to be important to the Fed when determining monetary policy during their FOMC meetings. It details economic activity and conditions by region throughout the U.S. With Fed Chairman Ben Bernanke?s testimony last week, I don?t think we will see any significant surprises in this report, and therefore will likely not cause much movement in mortgage rates Wednesday afternoon.
Thursday morning?s economic data will come from the Commerce Department when they will post June?s Durable Goods Orders at 8:30 AM ET. Current forecasts are currently calling for a gain of 1.7% after showing a slight loss in new orders during May. This data gives us an indication of manufacturing sector strength by tracking orders at U.S. factories for big-ticket items. These are products that are expected to last at least three years. A stronger than expected number may lead to higher mortgage rates Thursday morning. If it reveals a decline, mortgage rates should drop Thursday morning.
Friday?s first release is the 2nd Quarter Employment Cost Index (ECI) that measures employers? costs for wages and benefits. It is considered to be an important measurement of wage inflation and can have a pretty big impact on the bond market and mortgage rates. If it shows a rapid increase, raising inflation concerns, the bond market may drop and mortgage rates rise.
Friday morning also brings us the release of the single most important report we see regularly. The quarterly Gross Domestic Product (GDP) is considered to be the best indicator of economic growth. It is the sum of all goods and services produced in the U.S. and usually has a great deal of influence on the financial markets. Current forecasts are estimating to see a 3.1% pace. A larger increase would probably boost stock prices and hurt bond prices, leading to higher mortgage rates. But a smaller increase would likely fuel a bond market rally.
Also being released Friday is the final revision to July?s University of Michigan Index of Consumer Sentiment. Unless we see a drastic revision to the preliminary estimate of 83.0, I think the markets will probably shrug this news off due to the importance of the GDP.
The week?s data is rounded off with two housing sector related releases Tuesday and Thursday, but I don?t think they will have much of an impact on the bond market or mortgage rates. June?s Existing Home Sales will be posted Tuesday while New Home Sales will be released Thursday. I would expect that other reports or factors will drive bond trading and mortgage pricing more than these will.
Overall, this is another huge week for the bond market and mortgage rates. If we get weaker than expected economic results, we may see mortgage rates make another leg lower. However, stronger than expected results will likely lead to higher rates for the week. With the bond market near the bottom of its recent trading range, I am holding the lock recommendations for immediate and short-term periods. I suspect that we may see some profit taking by traders, which could drive bond yields and mortgage rates higher.