|
This week brings us the release of five economic reports that may
influence mortgage rates, one of which is arguably the single most
important monthly report for the markets. There is data set for release
four of the five days, so we can expect to see movement in rates multiple
days this week. We are also into corporate earnings season, which can
heavily influence stock trading and indirectly bond trading. If earnings
reports start to indicate a general consensus of weaker earnings than
analysts were expecting, stocks should go into selling mode and bonds
could benefit as investors seek the safety of government and mortgage
bonds.
The National Association of Realtors will start the week’s activities with
the release September's Existing Home Sales data late tomorrow morning.
This report gives us an indication of housing sector strength and
mortgage credit demand by tracking home resales. I don't see it having
much of an influence on the bond market or mortgage rates, but a reading
that varies greatly from analysts' forecasts could lead to a slight
change in mortgage pricing. It is expected to show a decline in sales
from August to September, meaning the housing sector softened. That would
be favorable news for the bond market since a weakening housing sector
makes a broader economic recovery less likely and allows bonds to remain
appealing to investors.
The Labor Department will post September's Employment report early
Tuesday morning, rescheduled from earlier this month due to the
government shutdown. This extremely important report will reveal the U.S.
unemployment rate, number of new payrolls added or lost during the month
and average hourly earnings. These are considered to be key readings of
the employment sector and can have a huge impact on the financial
markets. The ideal scenario for the bond market is rising unemployment,
falling payrolls and a drop in earnings.
If this report gives us weaker than expected readings, bond prices should
move higher and we should see lower mortgage rates Tuesday. Although, it
is worth noting that the accuracy of the data is likely to be questioned
as a result of the shutdown. However, stronger than forecasted readings
would be bad news for the bond market and mortgage rates. Analysts are
expecting to see the unemployment rate remain at 7.3%, an increase of
183,000 new jobs from August's level and a 0.2% increase in earnings.
There is nothing of importance set for release Wednesday and Thursday has
only a minor housing report scheduled. That would be September's New Home
Sales at 10:00 AM ET. This data covers the small percentage of home sales
that Monday’s Existing Home Sales report didn't include. It is expected
to show an increase in sales of newly constructed homes, but regardless
of its results I am not expecting it to have a significant impact on
mortgage rates Thursday.
Friday has two pieces of economic data that could affect mortgage rates.
The Commerce Department will post Durable Goods Orders for September at
8:30 AM ET. This report gives us a measurement 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. Analysts are
currently calling for an increase in new orders of approximately 3.5%. If
we see a much larger increase in orders, mortgage rates will probably
rise as bond prices fall. On the other hand, a significantly weaker than
expected reading should be good news for the bond market and mortgage
rates, but this data can be quite volatile from month to month and is
difficult to forecast. Therefore, a small variance from forecasts likely
will have little impact on Friday’s bond trading or mortgage pricing.
The week's last report comes just before 10:00 AM ET Friday when the
University of Michigan updates their Index of Consumer Sentiment for this
month. This report is moderately important because it helps us measure
consumer confidence, which is believed to indicate consumers' willingness
to spend. If consumers are more confident in their own financial and
employment situations, they are more apt to make a large purchase in the
near future. Since consumer spending makes up over two-thirds of the U.S.
economy, any related data is watch closely. Current forecasts show this
index falling from the preliminary reading of 75.2 to 74.5, meaning
confidence was not as strong this month as previously thought. That would
be good news for mortgage rates.
Overall, Tuesday is the most important day of the week with the almighty
Employment report now scheduled. None of the other data set for release
is considered key or market-moving, but most of the reports can still
affect mortgage rates if they show a noticeable variance from forecasts.
Wednesday should be the calmest day unless something unexpected happens.
However, stock movement can drive bond trading and impact mortgage rates
any day, so please proceed cautiously if still floating an interest rate.
Maintaining contact with your mortgage professional would be prudent this
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...
|
No comments:
Post a Comment