June 23rd, 2008 8:53 AM by Lehel Szucs
This week will likely prove to be very active in terms of mortgage rate movement due to the economic data and other events that are scheduled. There are six economic reports scheduled for release, but in addition to the data, another Federal Open Market Committee (FOMC) meeting will be held this week. Together, we have the makings of a potentially volatile week in the financial and mortgage markets.
There is no relevant economic news scheduled for release tomorrow. Tuesday brings us the first important report of the week with the release of June's Consumer Confidence Index (CCI). The CCI is very important to the financial markets because it measures consumer willingness to spend, which is important because consumer spending makes up two-thirds of the U.S. economy. If it shows an increase in confidence from last month, we can expect to see the bond market falter and mortgage rates rise slightly. Current forecasts are calling for a reading 57.0, down slightly f rom last month's 57.2 reading.
The only important release scheduled for Wednesday is May's Durable Goods Orders, which gives us an indication of manufacturing sector strength. It is known to be quite volatile from month to month and is expected to show no change new orders from April to May. A decline in new orders would be the ideal scenario for the bond market and could lead to a decline in mortgage pricing Wednesday.
There are two housing related reports scheduled for release this week, but neither is likely to cause any movement in mortgage rates. May's New Home Sales will be released Wednesday morning while Existing Home Sales will be posted Thursday morning. These reports give us a measurement of housing sector strength and mortgage credit demand, but usually do not cause much movement in mortgage rates.
The FOMC meeting that begins Tuesday afternoon will adjourn Wednesday afternoon. It is widely expected that Mr. B ernanke and company will not change key short-term interest rates at this meeting. But, as we have seen so many times in the past, it is the post meeting statement that often creates the most volatility in the markets. They could give an opinion of the overall economy, hinting at a possible future move or lack of one. Statements like these could cause a knee-jerk reaction in the markets and possibly mortgage pricing Wednesday afternoon. I suspect we will hear concerns about inflation that will lead to selling in bonds.
The only relevant economic data scheduled for release Thursday is the final reading to the1st Quarter GDP and weekly unemployment claims. The GDP data is quite aged now (covers January through March) and will likely have little impact on the bond market or mortgage pricing unless it varies greatly from previous readings. Last month's first revision showed a 0.9% rate of growth, but analysts are expecting to see an upward revision to 1.0%.
May's Personal Income and Outlays data will be posted Friday morning. This report gives us an indication of consumer ability to spend and current spending activity. Analysts are expecting to see an increase of 0.4% in income and a 0.7% rise in the spending portion of the report. Smaller than expected increases should be good news for the bond market and mortgage rates.
Overall, tomorrow will likely be the quietest day of the week. The most active should be Tuesday or Wednesday to the importance of the data and FOMC meeting. Wednesday's Durable Goods Orders could also help make it a busy day. Friday's news may also affect mortgage rates, but likely not as much as earlier days. This would definitely be a good week to maintain constant contact with your mortgage professional.
If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place betwee n 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Lock if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.
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