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Market Comment
Mortgage bond prices finished the week near unchanged, which kept rates relatively in check. Rates fell Monday as stocks were weaker and the data disappointed. Existing home sales came in at 4.92m versus the expected 5.1m mark. The small improvements were erased Thursday in response to the weekly jobs data. Weekly jobless claims came in at 339k versus the expected 351k. Fortunately most of the trading this week was within a narrow range. Rates moved up and down throughout the week but finished flat to better by 1/8 of a discount point.
LOOKING AHEAD
|
Economic
Indicator |
Release
Date & Time |
Consensus
Estimate |
Analysis
|
| Personal Income and Outlays |
Monday, April 29,
8:30 am, et |
Up 0.4%,
Up 0.1% |
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
| PCE Core Inflation |
Monday, April 29,
8:30 am, et |
Up 0.2% |
Important. Measures price increases for all domestic personal consumption. Weaker figure may help rates improve. |
| Q3 Employment Cost Index |
Tuesday, April 30,
8:30 am, et |
Up 0.2% |
Very important. A measure of wage inflation. Weakness may lead to lower rates. |
| Consumer Confidence |
Tuesday, April 30,
10:00 am, et |
58.7 |
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| ADP Employment |
Wednesday, May 1,
8:30 am, et |
132k |
Important. An indication of employment. Weakness may bring lower rates. |
| ISM Index |
Wednesday, May 1,
10:00 am, et |
51.4 |
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates. |
| Fed Meeting Adjourns |
Wednesday, May 1,
2:15 pm, et |
No rate changes |
Important. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting. |
| Weekly Jobless Claims |
Thursday, May 2,
8:30 am, et |
329k |
Important. An indication of employment. Higher claims may result in lower rates. |
| Preliminary Q1 Productivity |
Thursday, May 2,
8:30 am, et |
Up 0.1% |
Important. A measure of output per hour. Improvement may lead to lower mortgage rates. |
| Trade Data |
Thursday, May 2,
8:30 am, et |
$44.3b deficit |
Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates. |
| Employment |
Friday, May 3,
8:30 am, et |
7.6%,
Payrolls +110k |
Very important. An increase in unemployment or weakness in payrolls may bring lower rates. |
| Factory Orders |
Friday, May 3,
10:00 am, et |
Up 1.2% |
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
Busy Week
Economic data is the roadmap investors and traders use to drive their trading decisions. As a general rule, economic data that is lower than expectations is good for bonds/interest rates and bad for stocks. The opposite is also true, better than expected data is good for stocks and bad for bonds/interest rates. The reason is simple, weak data will prompt the Federal Reserve to keep rates low. This week is packed with “event” risk. Rates are historically low. Floating into the data is risky. A cautious approach to float/lock decisions would be prudent.
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