Personal Income and Outlays

Weekly Economic Releases for Mar. 22nd

This week brings us the release of six monthly and quarterly reports for the bond market to digest. Two of these reports can be considered much less important than the others, but with data scheduled for release four out of the five days we will still likely see movement in rates from day to day.

The first report of the week is February’s Existing Home Sales late tomorrow morning. It will give us a measurement of housing sector strength and mortgage credit demand, but is usually considered to be of low importance to the financial markets. Its’ sister report – New Home Sales, will be posted Wednesday morning. Since tomorrow’s release is the day’s only data, it may influence bond trading enough to cause a slight change in mortgage rates if it varies greatly from forecasts. Current forecasts are calling both reports to show a decline in sales.

Wednesday’s important data comes from the Commerce Department, who will post February’s Durable Goods Orders. This report gives us a measurement of manufacturing sector strength by tracking new orders for big-ticket items, or products that are expected to last three or more years. This data is known to be volatile from month to month but is still considered to be of high importance. Analysts are expecting it to show a decline in new orders of approximately 2.0%. A smaller decline would be considered a negative for bonds and could lead to higher mortgage rates Wednesday morning.

The next relevant data is Thursday’s final revision to the 4th Quarter GDP. This is the second and final revision to January’s preliminary reading and is expected to show a downward revision of 0.4% to the reading that was posted last month. Analysts are now more concerned with next month’s preliminary reading of the 1st quarter than data from three to six months ago, so I don’t expect this report to affect mortgage rates much.

There are two relevant reports scheduled for release Friday. The first is February’s Personal Income & Outlays report. This data helps us measure consumers’ ability to spend and current spending habits, which is important to the mortgage market because of the influence that consumer spending related information has on the financial markets. If a consumer’s income is rising, they are more likely to make additional purchases. This raises inflation concerns and has a negative affect on the bond market and mortgage rates. Current forecasts are calling for a 0.1% drop in income and a 0.3% increase in spending.

The second report comes from the University of Michigan at 9:45 AM ET. Their revision to the March consumer sentiment index will give us an indication of consumer confidence, which hints at consumers’ willingness to spend. It is expected to show little change from the previous reading of 56.6.

Overall, it is difficult to label one particular day as the most important of the week. The single most important report will likely be the Durable Goods Orders, but none of the week’s data has the potential to be a major market mover. It will be interesting to see whether last week’s Fed news influences this week’s trading. After the huge rally, we saw some weakness in bonds at the end of the week, but this did not come as a surprise. If the stock markets start to move lower again, we should see gains in bonds and improvements in mortgage rates. But, if stocks continue to move higher, further pressure in bonds are possible, leading to higher mortgage pricing.

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 c annot be guaranteed to be in the best interest of all/any other borrowers.

Personal Income and Outlays

What’s Ahead for Mortgage Rates This Week: March 2nd

Mortgage markets worsened last week, taking interest rates with them.

A steady drip of sour economic news plus concerns about the banking system outmuscled Fed Chairman Ben Bernanke’s congressional testimony in which he said the recession would likely end later this year.

Overall, mortgage rates have risen in 9 of the last 12 trading days.

This week, it’s unclear in what direction mortgage rates will go. However, it won’t be because of a lack of action.
The week starts with the 8:30 A.M. ET release of the Personal Spending report, a closely-monitored report that should make a broad market impact. Economists expect that spending increased in February, providing key support for economy.

If economists are wrong, though, and spending fell, it will cast doubt on the speed at which an economic recovery will occur. Consumer spending, after all, makes up two-thirds of the economy. No spending means no recovery.

Next, on Wednesday, the White House is expected to release the details of the Homeowner Affordability and Stability Plan. Again, markets are watching for the broader impact of the news. If analysts and traders deem the plan effective, watch for stock markets to improve and bond markets to weaken.

This would cause mortgage rates to rise.

Then, Friday, we’ll get to see February’s official jobs number. Job loss is expected to exceed 600,000 for the month and unemployment may reach 8 percent. On many levels, if the jobs data meets the expectations, it would be okay with respect to mortgage rates.

As always, it’s recommended that you float your mortgage rate cautiously. Wall Street is nervous for its turf and hyper-sensitive to Beltway influence. Markets can change in an instant and when they do, they usually change for the worse.

This week, have a game plan. It’ll be easier to take advantage of daily mortgage rate movement.

(Image courtesy: USA Today)

Personal Income and Outlays

Weekly Economic Releases for Mar. 1st

This week brings us the release of six economic reports to be concerned with. Two of the reports are considered to be very important, but nearly all of the week’s releases have the potential to affect mortgage rates. With reports being posted each day except Tuesday, we will likely see a fairly active week in mortgage rates.

The week’s first data comes tomorrow morning with the release of two relevant reports. The first is January’s Personal Income ad Outlays data at 8:30 AM ET, which gives us an indication of consumer ability to spend and current spending habits. Current forecasts call for a decline in income of 0.2% while spending is expected to rise 0.42%. A larger than expected increase in spending would be bad news for the bond market and could drive mortgage rates higher. Weaker than forecasted numbers should help push mortgage rates slightly lower tomorrow.

The Institute for Supply Management (ISM) will release their manufacturing index for February late tomorrow morning. This index measures manufacturer sentiment and can have a pretty large impact on the financial and mortgage markets if it varies from forecasts. It is expected to show a decline from January’s 35.6 to 34.0 last month. This is important because a reading below 50.0 is a recession indicator, meaning that more surveyed manufacturers felt business worsened during the month than those who felt it had improved. If we see a weaker than expected reading, the bond market could rally. However, a higher than forecasted reading could lead to major selling in bonds, causing mortgage rates to rise.

The Fed Beige Book is the next report scheduled for release and it will be posted Wednesday afternoon. This report details economic activity throughout the country by region. The Fed relies heavily on this data during their FOMC meetings, so look for a potential reaction during afternoon trading Wednesday. It probably will not cause a major sell off in the stock or bond markets, but could cause enough movement in bond prices to possibly improve or worsen mortgage rates slightly if it reveals any significant surprises.

There two reports scheduled for release Thursday morning. The first is the revised Productivity index for the 4th Quarter of last year. The preliminary reading posted last month showed an annual rate of 3.2% increase in worker output. Analysts are expecting to see a sizable downward revision to the initial reading. It is expected to be cut to a 1.6% increase in output, meaning workers were not as productive as previously thought during the quarter. Employee productivity is watched fairy closely because a higher level of output per hour is believed to mean that the economy can expand without inflation concerns.

January’s Factory Orders will be posted late Thursday morning, which will give us a measurement of manufacturing sector strength. This data is similar to last week’s Durable Goods, except this report covers orders for both durable and non-durable goods. Current forecasts are calling for a drop in new orders of approximately 2.1%. A larger than expected drop would be good news for the bond market and could lead to an improvement in mortgage rates.

The biggest news of the week comes Friday morning when one of the single most important monthly reports we see will be posted. The Labor Department will release February’s Employment report at 8:30 AM ET Friday. Some of the important portions of the report will give us the unemployment rate, number of new jobs added or lost and the average hourly earnings reading. The best combination for the bond market and mortgage rates would be an increase in the unemployment rate, a large drop in payrolls and little or no increase in earnings. Current forecasts are calling for 0.3% increase in the unemployment rate to 7.9% and approximately 615,000 jobs lost during the month.

Overall, look for a fairly active week for mortgage rates. I suspect there will be some optimism leading up to Friday’s Employment report, which is of concern to me. I believe the market is expecting to see very weak numbers Friday morning and has already built that into current pricing. The problem is that if it meets forecasts, or is even slightly stronger than expected, we could see bonds drop and mortgage rates rise. Because of this, I may be extending the lock recommendation to longer periods before Friday’s data. Friday is undoubtedly the biggest day of the week, but tomorrow may also bring noticeable movement in mortgage rates. Please be careful this week if still floating an interest rate.

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 m y 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.