Reports on housing, manufacturing and retail spending could impact the markets. Also, Fed Chair Powell will give his semi-annual testimony on the state of the U.S. economy to Congress on Tuesday and Wednesday, which could sway trading.
• The closely-watched Retail Sales report will be released Monday.
• Look for manufacturing news via the Empire State Index on Monday and the Philadelphia Fed Index on Thursday.
• Housing data will be released Tuesday with the NAHB Housing Market Index and Wednesday with Housing Starts and Building Permits.
• As usual, Weekly Initial Jobless Claims will be delivered on Thursday.
Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve. In contrast, strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond on which home loan rates are based.
When you see these Bond prices moving higher, it means home loan rates are improving. When Bond prices are moving lower, home loan rates are getting worse.
To go one step further, a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes are on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.
As you can see in the chart below, Mortgage Bonds traded in a sideways pattern in recent days. Home loan rates remain attractive.
Chart: Fannie Mae 4.0% Mortgage Bond (Friday Jul 13, 2018)