| Market Comment
Mortgage bond prices finished the week slightly lower which pushed rates higher. Most of the losses came late in the week and followed the Fed’s announcement to reduce their balance sheet starting in October. The housing data also caused some concerns. The NAHB Housing Market Index was lower than expected. Housing starts were flat and existing home sales were weak. Weekly jobless claims and continuing claims were both lower than expected. The Philadelphia Fed report showed strength in the northeast region. The U.S. Federal Housing Finance Agency (FHFA) reported housing prices rose 0.2% in July and 6.3% in the past year. While the overall economy has been sluggish in recent years one bright spot has been housing which has seen prices rise year over year. We ended the week worse by approximately 1/8 to 1/4 of a discount point.
LOOKING AHEAD
Economic
Indicator |
Release
Date & Time |
Consensus
Estimate |
Analysis |
| Consumer Confidence |
Tuesday, Sept. 26,
10:00 am, et |
123 |
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| New Home Sales |
Tuesday, Sept. 26,
10:00 am, et |
568K |
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
| Treasury Auctions Begin |
Tuesday, Sept. 26,
1:15 pm, et |
None |
Important. 2Y Notes on Tuesday, 5Y Notes on Wednesday, and 7Y Notes on Thursday. |
| Durable Goods Orders |
Wednesday, Sept. 27,
8:30 am, et |
Up 1.2% |
Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates. |
| Weekly Jobless Claims |
Thursday, Sept. 28,
8:30 am, et |
259K |
Important. An indication of employment. Higher claims may result in lower rates. |
| Q2 GDP Revised |
Thursday, Sept. 28,
8:30 am, et |
Up 2.7% |
Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| Personal Income and Outlays |
Friday, Sept. 29,
8:30 am, et |
Up 0.3%,
Up 0.2% |
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
| PCE Core Inflation |
Friday, Sept. 29,
8:30 am, et |
Up 0.1% |
Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve. |
| U of Michigan Consumer Sentiment |
Friday, Sept. 29,
10:00 am, et |
95 |
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
Fed Makes a Change
The Federal Reserve announced last week that they will finally start reducing their $4.5 trillion dollar balance sheet starting in October. Their statement noted, “The Committee intends to gradually reduce the Federal Reserve’s securities holdings by decreasing its reinvestment of the principal payments it receives from securities held in the System Open Market Account. Specifically, such payments will be reinvested only to the extent that they exceed gradually rising caps.” The plan is to initially reduce reinvestment by $10B and adjust that amount upward in the future.
The Fed believes the economy is on solid footing and wants to see rates increase. Now is a great time to take advantage of historically favorable mortgage interest rates.
Copyright 2017. 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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