Mortgage Market in Review from Monte Hill week of 2/26/2007
Market Comment
Mortgage bond prices fell pushing rates higher last week. The consumer price index core data, a measure of inflation, pressured bonds lower. The Fed has recently indicated, “Its predominant policy concern is the risk that inflation will fail to ease as expected.” Traders remain concerned that the Fed may not be able to lower rates if inflationary pressures emerge. For the week, interest rates on government and conventional loans rose by about 1/4 of a discount point.
The gross domestic product data Wednesday will be the most important event this week. Durable goods orders, consumer confidence, new homes sales, income, outlays, ISM Index, and consumer sentiment data will also be important.
Looking Ahead |
Economic Indicator | Release Date and Time | Consensus Estimate |
Analysis |
Durable Goods Orders | Tuesday, Feb. 27, 8:30 am, et | Down 1.5% | Important. An indication of the demand for “big ticket” items. A larger than expected decrease may lead to lower rates. |
Consumer Confidence | Tuesday, Feb. 27, 10:00 am, et | 110 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
Existing Home Sales | Tuesday, Feb. 27, 10:00 am, et | Up 0.3% | Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates. |
Q4 Preliminary GDP | Wednesday, Feb. 28, 8:30 am, et | Up 2.3% | Very important. The aggregate measure of US economic production. A decrease may lead to lower rates. |
New Home Sales | Wednesday, Feb. 28, 10:00 am, et | Down 1.7% | Important. An indication of economic strength and credit demand. A larger decrease may lead to lower rates. |
Personal Income and Outlays | Thursday, March 1, 8:30 am, et | Income up 0.3%, Outlays up 0.4% | Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
ISM Index | Thursday, March 1, 10:00 am, et | 50.0 | Important. A measure of manufacturer sentiment. A large decline may lead to lower mortgage rates. |
U of Michigan Consumer Sentiment | Friday, March 2, 10:00 am, et | None | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
Preliminary GDP
The Gross Domestic Product (GDP) is one the most important reports during any given quarter. GDP is a measure of US economic output and spending. The report is significant in that it provides investors, analysts, traders, and economists with a comprehensive report of the direction of the economy. In addition, it also influences the decisions of Federal Reserve policy makers, Congressional budget employees, and corporate financial planners.
GDP is the sum total of goods and services produced by the United States. The initial report is often based on incomplete data. Therefore, additional revisions are released over the following two months. There are often substantial differences between the initial release and the revisions. The mortgage-backed security market generally responds favorably to weaker GDP growth.
Monte J. Hill
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MacombHomeLending.com
www.HouseHunterBob.com