Adam in CO
07-31-2006, 02:36 PM
There are four important reports scheduled for release this week that are likely to affect mortgage pricing. The first important release scheduled for the week is June?s Personal Income and Outlays data Tuesday morning. This report helps us measure consumer ability to spend and current spending habits. If it shows sizable increases, bond selling could lead to higher mortgage rates. Current forecasts are calling for an increase of 0.7% in income and an increase of 0.4% in spending.
The next piece of data will also be posted Tuesday morning. The Institute for Supply Management (ISM) will post their manufacturing index for July. This index measures manufacturer sentiment by surveying trade executives about business conditions during the previous month. A reading above 50.0 means that more surveyed executives felt that business improved than those who said it had worsened. This week?s release is expected to show a reading of 56.5, down slightly from last month?s 57.0. A smaller than expected reading would be great news for the bond market and would likely improve mortgage rates Tuesday.
Thursday morning brings us June?s Factory Orders data. This report helps us measure manufacturing sector strength by tracking orders for both durable and non-durable goods during the month of June. It is similar to last week?s Durable Goods Orders report that tracks only orders for big-ticket items. Since a significant portion of the data was released last week, this report may not have as big of an impact on the markets as you may think. Analysts? are expecting to see an increase of approximately 1.1% in new orders.
The most important piece of data this week and each month is July?s Employment report. This report gives us the U.S. unemployment rate, number of new jobs added and the average hourly earnings reading. The ideal situation for the bond market is rising unemployment, a loss of new jobs and little increase in earnings. This report is considered to be one of the single most important releases that we see each month.
While the GDP is arguably the single most important report in general, it is posted quarterly rather than monthly like the Employment report. It is expected to show that the unemployment rate stood at 4.6% last month while approximately 145,000 new jobs were added. The unemployment rate probably will not be much of a factor if the new jobs number varies from forecasts. However, due to the importance of the payroll numbers, we will undoubtedly see quite a bit of volatility in the markets and mortgage pricing.
Overall, expect to see another active week for mortgage rates. The most important day is Friday due to the data being released, but Tuesday is also a very important day with the ISM index scheduled for release. The rest of the week is likely to be relatively calm. We may see some pressure in bonds mid to late week ahead of Friday?s employment numbers, so I am holding the lock recommendation for immediate term closings.
The next piece of data will also be posted Tuesday morning. The Institute for Supply Management (ISM) will post their manufacturing index for July. This index measures manufacturer sentiment by surveying trade executives about business conditions during the previous month. A reading above 50.0 means that more surveyed executives felt that business improved than those who said it had worsened. This week?s release is expected to show a reading of 56.5, down slightly from last month?s 57.0. A smaller than expected reading would be great news for the bond market and would likely improve mortgage rates Tuesday.
Thursday morning brings us June?s Factory Orders data. This report helps us measure manufacturing sector strength by tracking orders for both durable and non-durable goods during the month of June. It is similar to last week?s Durable Goods Orders report that tracks only orders for big-ticket items. Since a significant portion of the data was released last week, this report may not have as big of an impact on the markets as you may think. Analysts? are expecting to see an increase of approximately 1.1% in new orders.
The most important piece of data this week and each month is July?s Employment report. This report gives us the U.S. unemployment rate, number of new jobs added and the average hourly earnings reading. The ideal situation for the bond market is rising unemployment, a loss of new jobs and little increase in earnings. This report is considered to be one of the single most important releases that we see each month.
While the GDP is arguably the single most important report in general, it is posted quarterly rather than monthly like the Employment report. It is expected to show that the unemployment rate stood at 4.6% last month while approximately 145,000 new jobs were added. The unemployment rate probably will not be much of a factor if the new jobs number varies from forecasts. However, due to the importance of the payroll numbers, we will undoubtedly see quite a bit of volatility in the markets and mortgage pricing.
Overall, expect to see another active week for mortgage rates. The most important day is Friday due to the data being released, but Tuesday is also a very important day with the ISM index scheduled for release. The rest of the week is likely to be relatively calm. We may see some pressure in bonds mid to late week ahead of Friday?s employment numbers, so I am holding the lock recommendation for immediate term closings.