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Market
Comment
Mortgage bond prices finished the week slightly higher, which put a little downward pressure on rates. Rates improved gradually throughout most of the week but ended on a negative note. The Fed’s Jackson Hole symposium spiked inflation fears Friday and some of the housing data showed weakness. The rest of the data was mixed. Weekly ADP employment was 11.75K vs 9.5K the prior week. FHFA housing was unchanged vs the expected 0.2% increase. Consumer confidence was 89.4 vs 90.2. New home sales were 607K vs 620K. Durable goods were up 1.1% vs 0.5%. Income rose 0.4% vs 0.2%. Spending was up 0.2% vs 0.1%. Core PCE inflation rose 0.2% as expected. Weekly jobless claims were 203K vs 208K. Consumer sentiment was 51.7 vs 51. Mortgage interest rates finished the week better by approximately 1/8 of a discount point.
LOOKING
AHEAD
|
Economic
Indicator |
Release
Date &
Time |
Consensus
Estimate |
Analysis
|
| ISM Index |
Tuesday, Sept. 1,
10:00 am, et
|
55.3
|
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
|
| Construction Spending |
Tuesday, Sept. 1,
10:00 am, et
|
Down 0.1%
|
Low importance. An indication of economic strength. Significant weakness may lead to lower rates.
|
| ADP Employment |
Wednesday, Sept. 2,
8:30 am, et
|
40K
|
Important. An indication of employment. Weakness may bring lower rates.
|
| Factory Orders |
Wednesday, Sept. 2,
10:00 am, et
|
Down 0.2%
|
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
|
| Fed “Beige Book” |
Wednesday, Sept. 2,
2:00 pm, et
|
|
Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates.
|
| Weekly Jobless Claims |
Thursday, Sept. 3,
8:30 am, et
|
200K
|
Important. An indication of employment. Higher claims may result in lower rates.
|
| Trade Data |
Thursday, Sept. 3,
8:30 am, et
|
$74B deficit
|
Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
|
| Employment |
Friday, Sept. 4,
8:30 am, et
|
4.2%,
Payrolls +45K
|
Very important. An increase in unemployment or weakness in payrolls may bring lower rates.
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Hawkish Fed
Fed Chair Kevin Warsh’s Jackson Hole message was deliberately hawkish last Friday. He noted the economy and labor market appear resilient, but inflation remains materially above the Fed’s 2% objective, so price stability should take precedence. He cited 12-month PCE inflation of 3.7% and six‑month inflation of 4.1%, arguing that the recent cooling has not yet established a convincing downtrend in underlying inflation. He stopped short of promising a September increase, but he made clear that if inflation does not return toward target “clearly and at sufficient speed,” the Fed may need to tighten further rather than accept an extended period of above-target inflation.
The immediate implication is unfavorable for mortgage interest rates. His remarks raise the likelihood that rates stay higher for longer. The Fed does not set 30-year mortgage rates directly, but fixed mortgage rates tend to follow longer-dated Treasury yields and expectations for inflation and Fed policy. A cautious approach to float/lock decisions is prudent as inflation fears remain elevated.
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