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Market
Comment
Mortgage bond prices rose last week pushing
mortgage interest rates lower. Tame inflation readings and lower
than expected US economic growth figures helped mortgage interest
rates remain very favorable. The employment cost index came in as
expected while the gross domestic product data showed a smaller than
expected increase. The Treasury auctions generally went well and
trading in stocks remained choppy.
Rates fell by about 3/8 to 1/2 of a discount
point for the week.
The most important data this week will be the
employment report Friday. PCE inflation data and ADP employment may
also move the markets.
LOOKING
AHEAD
|
Economic
Indicator |
Release
Date &
Time |
Consensus
Estimate |
Analysis
|
| Construction
Spending |
Monday, Aug. 2,
10:00 am, et
|
Down 1.0%
|
Low
importance. An indication of economic strength. A significant
decrease may lead to lower rates.
|
| ISM
Index |
Monday, Aug. 2,
10:00 am, et
|
53.5
|
Important.
A measure of manufacturer sentiment. A large decline may lead
to lower mortgage rates.
|
| Personal
Income and Outlays |
Tuesday, Aug. 3,
8:30 am, et
|
Income up 0.2%,
Outlays up 0.1%
|
Important.
A measure of consumers’ ability to spend. Weakness may lead
to lower mortgage rates.
|
| PCE
Core |
Tuesday, Aug. 3,
8:30 am, et
|
Up 0.1%
|
Important.
An indication of inflation. A lower figure may lead to lower
rates.
|
| Factory
Orders |
Tuesday, Aug. 3,
10:00 am, et
|
Up 0.8%
|
Important.
A measure of manufacturing sector strength. Weakness may lead
to lower rates.
|
| ADP
Employment |
Wednesday, Aug. 4,
8:30 am, et
|
Up 30k
|
Important.
An indication of employment. Weakness in payrolls may bring
lower rates.
|
| Employment |
Friday, Aug. 6,
8:30 am, et
|
Unemp. @ 9.6%,
Payrolls -116k
|
Very
important. An increase in unemployment or a large decrease in
payrolls may bring lower rates.
|
| Consumer
Credit |
Friday, Aug. 6,
3:00 pm, et
|
Down $3b
|
Low
importance. A significantly large increase may lead to lower
mortgage interest rates.
|
Core PCE
The US Department of Commerce’s Bureau of Economic Analysis releases
the core PCE price index. The report provides the average increase in
costs for personal consumption expenditures excluding food and energy.
As of July 2009 the figure now includes food services in the figure.
The report is significant in that the Fed uses the
PCE in determining inflation as opposed to the prior use of the
consumer price index. The reports vary in that the CPI uses a
predetermined pricing of a basket of goods and services for several
years while the PCE data uses pricing of expenditures the changes from
quarter to quarter. An important difference is also the fact that PCE
includes the price of spending for and on behalf of households. This
includes health care spending paid for a household by a business. The
CPI only reflects out of pocket expenses paid directly by consumers.
While inflation fears remain subdued as of late
there are concerns that inflation could eventually emerge. Taking
advantage of rates at these historically low levels makes sense with
so much uncertainty in the US economy.
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2010. All Rights Reserved. Mortgage Market
Information Services, Inc. www.ratelink.com
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