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This week brings us only four pieces of economic data that have the
potential to influence mortgage rates in addition to two Treasury
auctions. We are also still in corporate earnings season, so any
surprises in those releases could affect stock and bond trading, leading
to changes in mortgage rates. There is mortgage rate-relevant data set to
be posted four of the five days this week.
The National Association of Realtors will post June's Existing Home Sales
figures late tomorrow morning. This report gives us a measurement of
housing sector strength and mortgage credit demand. Current forecasts are
calling for a small increase in sales from May's totals. A drop in sales
would be considered good news for bonds and mortgage rates because a
weakening housing sector makes broader economic growth more difficult.
However, unless this data varies greatly from forecasts it probably will
lead to only a minor change in mortgage rates.
Tuesday has nothing of importance scheduled that will likely influence
mortgage rates. Wednesday’s sole economic report is June's New Home Sales
report at 10:00 AM ET. This Commerce Department report gives us another
measurement of housing sector strength. Analysts are expecting it to show
an increase in sales of newly constructed homes, indicating that the new
home portion of the housing sector gained some strength last month. That
would be considered negative news for bonds, but since this data tracks
only a small percentage of all home sales it usually has little impact on
the bond market and mortgage rates unless it varies greatly from
forecasts. The Existing Home Sales report covers most of the home sales
in the U.S.
The Commerce Department will post June's Durable Goods Orders at 8:30 AM
ET Thursday. Current forecasts are currently calling for an increase in
new orders of 1.5% from May to June. This data gives us an indication of
manufacturing sector strength by tracking orders at U.S. factories for
big-ticket items, or products that are expected to last three or more
years. A much stronger than expected number may lead to higher mortgage
rates Thursday morning because it would point towards economic strength.
If it reveals a large decline in new orders, mortgage rates should drop
Thursday morning. It should be noted though that this data is known to be
extremely volatile from month to month, so a minor difference between
forecasts and the actual reading may not move the markets or mortgage
rates.
The week's final piece of data is the revised reading to July's
University of Michigan Index of Consumer Sentiment that will help us
measure consumer optimism about their own financial situations. This data
is considered relevant because rising consumer confidence usually
translates into higher levels of spending, which adds fuel to the economic
recovery and is looked at as bad news for bonds. Friday's release is an
update to the preliminary reading we saw two weeks ago, so unless we see
a drastic revision to the preliminary estimate of 83.9, I think the
markets will probably shrug this news off.
Also worth mentioning are a couple of Treasury auctions that may affect
bond trading and mortgage rates this week. The two most important are
Wednesday's 5-year Note and Thursday's 7-year Note sales. Results of the
auctions will be posted 1:00 PM ET each day. If investor interest is
strong, we can expect the broader bond market to rally and mortgage rates
to move lower. However, a lackluster demand could lead to bond selling
and higher mortgage rates Wednesday and Thursday afternoons.
Overall, I am expecting a relatively active week in the financial and
mortgage markets. I don’t see a particularly important day that can be
labeled as the key day of the week, but that doesn’t mean we won’t see
movement in rates multiple days. The most important report of the week is
Thursday’s Durable Goods Orders, so we may see the most movement that day
if the rest of the reports don’t show any significant surprises and the
markets remain calm. Unless corporate earnings or something else fuels a
rally or sell-off in stocks that drive bond trading, Tuesday appears to
be the best candidate as the least important day of the week.
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... Lock if my closing was taking place
between 21 and 60 days... Float if my closing was taking place over 60
days from now...
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