Forecast for the Week: News on housing, GDP and inflation highlight this week’s economic calendar

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This week features key reports across a wide range of sectors.

• Look for housing news with the S&P/Case-Shiller Home Price Index on Tuesday and Pending Home Sales on Wednesday.
• Consumer Confidence and the Consumer Sentiment Index will be released on Tuesday and Friday, respectively.
• Gross Domestic Product will be delivered on Wednesday, providing data on economic growth.
• Look for Personal Income, Personal Spending, Personal Consumption Expenditures and weekly Initial Jobless Claims on Thursday.
Chicago PMI will deliver manufacturing news on Friday.

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 been on an improving trend, but it will be important to look out for any reversals. Home loan rates remain historically attractive.

Chart: Fannie Mae 4.0% Mortgage Bond (Friday Aug 24, 2018)

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