Forecast for the Week: The busy economic calendar brings news on housing, inflation, consumer attitudes and the state of the U.S. economy

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The week’s broad array of economic data has the potential to move the markets, as does any geopolitical or trade war tensions.

• In the housing sector, look for New Home Sales Monday, the S&P/Case-Shiller Home Price Index Tuesday and Pending Home Sales Wednesday.
• Consumer Confidence will be released on Tuesday. The Consumer Sentiment Index follows on Friday.
• Manufacturing news comes via Durable Goods Orders data on Wednesday and the Chicago PMI on Friday.
• Thursday brings the final reading on first quarter 2018 Gross Domestic Product along with weekly Initial Jobless Claims.
• Look for news on inflation Friday with Personal Consumption Expenditures, along with Personal Income and Personal Spending data.

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 have held steady in recent days. Home loan rates remain historically attractive.

Chart: Fannie Mae 4.0% Mortgage Bond (Friday Jun 22, 2018)

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