| Newsletter-August 30th, 2010 | | |  | |  | | |
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Market
Comment
Mortgage bond prices fell slightly last
week pushing interest rates higher. Unfortunately the
seesaw trading pattern continued with rates rising and falling
throughout the week. We started the week with stronger than expected
Industrial Production and Capacity Use data pressuring mortgage
interest rates higher. Stocks fell mid-week following a shocking
27.2% decline in existing home sales and weaker than expected
durable goods orders. This helped us recover some of the earlier
losses. Friday was choppy with 1/4 point up and down swings
occurring throughout most of the morning. Despite all
the volatility we were able to stay relatively flat overall for the
week as rates rose by about 1/8 of a discount point.
The employment report Friday will be the most important release
this week. Expect more volatility.
LOOKING
AHEAD
|
Economic
Indicator |
Release
Date &
Time |
Consensus
Estimate |
Analysis
|
| Personal
Income and Outlays |
Monday, Aug. 30,
8:30 am, et
|
Up 0.3%,
Up 0.3%
|
Important.
A measure of consumers’ ability to spend. Weakness may lead
to lower mortgage rates.
|
| PCE
Core Inflation |
Monday, Aug. 30,
8:30 am, et
|
Up 0.1%
|
Important.
A measure of price increases for all personal consumption.
Weaker figure may help rates improve.
|
| Consumer
Confidence |
Monday, Aug. 30,
10:00 am, et
|
51.3
|
Important.
An indication of consumers’ willingness to spend. Weakness
may lead to lower mortgage rates.
|
| ADP
Employment |
Tuesday, Aug. 31,
8:30 am, et
|
-20k
|
Important.
An indication of employment. A large decrease in payrolls may
bring lower rates.
|
| ISM
Index |
Tuesday, Aug. 31,
10:00 am, et
|
53.3
|
Important.
A measure of manufacturer sentiment. Weakness may lead to
lower mortgage rates.
|
| Construction
Spending |
Tuesday, Aug. 31,
10:00 am, et
|
Down 0.4%
|
Low
importance. An indication of economic strength. A significant
decrease may lead to lower rates.
|
| Revised
Q2 Productivity |
Wednesday, Sept. 1,
8:30 am, et
|
Down 1.5%
|
Important.
A measure of output per hour. Improvement may lead to lower
mortgage rates.
|
| Factory
Orders |
Wednesday, Sept. 1,
10:00 am, et
|
Up 0.5%
|
Important.
A measure of manufacturing sector strength. Weakness may lead
to lower rates.
|
| Employment |
Friday, Sept. 3,
8:30 am, et
|
9.6%,
Payrolls -120k
|
Very
important. An increase in unemployment or a large decrease in
payrolls may bring lower rates.
|
Productivity
Productivity is the rate at which goods or services are produced. It
is most commonly defined in terms of labor, which is the contribution
of people to the process. Labor costs represent about two thirds of
the value of the output produced. The Bureau of Labor Statistics of
the US Department of Labor releases the most widely cited productivity
statistics quarterly and annually. Increased productivity is often
credited for economic growth with little signs of inflation.
Productivity is significant in that as it
increases, businesses can produce more with the same or less input.
This wealth building effect is vital to the US economy. As
productivity increases, the US economy generally performs better. As
productivity decreases, the economy generally suffers. While the bond
market generally favors signs of weakness in the economy, bonds
tolerate growth as long as the economic environment shows little or no
inflationary pressures. Keep in mind that rates remain very favorable.
Now is a great time to avoid the uncertainty surrounding continued
market volatility.
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Copyright
2010. All Rights Reserved. Mortgage Market
Information Services, Inc. www.ratelink.com
The information contained herein is
believed to be accurate, however no representation or warranties are
written or implied.
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| | |  | | | MORTGAGE MARKET IN REVIEW | Newsletter-August 30th, 2010 | |
