Mortgage bond
prices finished the week significantly higher which helped mortgage interest
rates fall. Rates were choppy the beginning of the week following speculation
that the European Central Bank would implement a plan to purchase member
nation debt to keep their borrowing costs in check. Data was mixed but higher
than expected weekly jobless claims and the Fed minutes, which indicated
further easing is likely, helped rates improve considerably Wednesday afternoon
and Thursday morning. Mortgage interest rates finished the week better by
almost a full discount point despite a selloff from the highs Friday
afternoon.
|
Looking
Ahead
|
|
Economic
Indicator
|
Release
Date
and Time
|
Consensus
Estimate
|
Analysis
|
Consumer Confidence
|
Tuesday, Aug. 28,
10:00 am, et
|
65
|
Important.
An indication of consumers’ willingness to spend. Weakness may lead to
lower mortgage rates.
|
2-year Treasury Note Auction
|
Tuesday, Aug. 28,
1:15 pm, et
|
None
|
Important.
Notes will be auctioned. Strong demand may lead to lower mortgage
rates.
|
Q2 Gross Domestic Product
|
Wednesday, Aug. 29,
8:30 am, et
|
Up 1.4%
|
Very
important. The aggregate measure of US economic production. Weakness
may lead to lower rates.
|
5-year Treasury Note Auction
|
Wednesday, Aug. 29,
1:15 pm, et
|
None
|
Important.
Notes will be auctioned. Strong demand may lead to lower mortgage
rates.
|
Fed “Beige Book”
|
Wednesday, Aug. 29,
2:00 pm, et
|
None
|
Important.
This Fed report details current economic conditions across the US.
Signs of weakness may lead to lower rates.
|
Weekly Jobless Claims
|
Thursday, Aug. 30,
8:30 am, et
|
370k
|
Important.
An indication of employment. Higher claims may result in lower
rates.
|
Personal Income and Outlays
|
Thursday, Aug. 30,
8:30 am, et
|
Unchanged,
Up 0.1%
|
Important.
A measure of consumers’ ability to spend. Weakness may lead to lower
mortgage rates.
|
PCE Core Inflation
|
Thursday, Aug. 30,
8:30 am, et
|
Up 0.2%
|
Important.
A measure of price increases for all domestic personal consumption.
Weaker figure may help rates improve.
|
7-year Treasury Note Auction
|
Thursday, Aug. 30,
1:15 pm, et
|
None
|
Important.
Notes will be auctioned. Strong demand may lead to lower mortgage
rates.
|
U of Michigan Consumer Sentiment
|
Friday, Aug. 31,
10:00 am, et
|
71
|
Important.
An indication of consumers’ willingness to spend. Weakness may lead to
lower mortgage rates.
|
Factory Orders
|
Friday, Aug. 31,
10:00 am, et
|
Up 0.1%
|
Important.
A measure of manufacturing sector strength. Weakness may lead to lower
rates.
|
MARKET
CONDITIONS
There is a Chinese
proverb that states, “May you live in interesting times.” It is often argued
that the word interesting is meant to be a synonym for turbulent
or dangerous. This phrase hits the bull’s-eye given the current state
of the financial markets. While stocks and bonds are swinging around wildly
there is some good news. Interest rates for conforming and FHA/VA loans
are historically very low.
Remember, low rates
are not a given considering the uncertainty in the financial markets.
Inflation, real or perceived, erodes the value of bonds causing bond prices
to fall and rates to rise. The last thing the economy needs now is raising
mortgage interest rates. With so much uncertainty, a cautious approach to
float/lock decisions would be wise.
|