This week brings us the release of several important economic reports for the mortgage market to digest. Monday kicks off with the release of March’s Personal Income & Outlays. This report helps us measure consumers’ ability to spend and current spending habits, which is important to the mortgage market due to the influence that consumer spending related information has on the financial markets. If a consumer’s income is rising, he is more likely to make additional purchases. This raises inflation concerns and has a negative affect on the bond market and mortgage rates. Current forecasts are calling for 0.5% increases in spending and income.
The Institute for Supply Management (ISM) will post their manufacturing index late Tuesday morning. This is one of the first important reports released each month and gives us an indication of manufacturer sentiment. A reading above 50 means that more surveyed trade executives felt business improved during the month than those who felt it had worsened. This points toward more manufacturing activity and could hurt bond prices, pushing mortgage rates higher. But, if we see a drop from last month’s reading of 50.9, the bond market should thrive and mortgage rates will probably fall. It is expected to show a reading of 51.0.
Wednesday’s sole report is March’s Factory Orders at 10:00AM. This is a fairly important release because it measures manufacturing sector strength. It is similar to last week’s Durable Goods Orders, except this report includes non-durable goods such as food and clothing. Generally, the market is more concerned with the durable goods orders like refrigerators and electronics than items such as cigarettes and toothpaste. This is why the Durable Goods report usually has more of an impact on the financial markets than the Factory Orders report does. Still, a smaller increase than the 1.0% that is expected could push mortgage rates slightly lower, while a larger increase will likely lead to higher rates.
The Labor Department will release its 1st Quarter Productivity and Costs report early Thursday morning. This information helps us measure employee productivity in the workplace. High levels of productivity help allow low-inflationary economic growth. If employee productivity is rising, the bond market should react favorably. However, a decrease could raise inflation concerns that cause bond prices to drop and mortgage rates to rise Thursday morning. It is expected to show a 1.1% increase in productivity.
The week’s most important release is being saved for last. The almighty Employment Report will be released Friday at 8:30AM, giving us April’s employment statistics. This is where we may see a huge rally or major sell-off in the bond market and large changes in mortgage rates. The ideal situation for the bond and mortgage markets would be an increase in the unemployment rate and fewer than expected new payrolls. If we are not so lucky, we may still see an improvement to mortgage pricing if we get weaker than expected readings. Just how much of an improvement or worsening depends on how much variance there is between forecasts and actual readings. This could turn out to be a wonderful day in the mortgage market, but it also carries risks of seeing mortgage rates move higher if the Labor Department posts stronger than expected readings. Current forecasts are calling for a 4.5% unemployment rate and approximately 100,000 new jobs.
Overall, look for plenty of movement in mortgage rates this week. I expect to see the biggest changes either Tuesday or Friday morning. The single most important report is Friday’s employment numbers and they will be the key as to whether we see mortgage rates move higher or lower for the week.
Craig Higdon has over 14 years experience in financing commercial loans, small business loans, construction loans, and land loans. He owns Excelsion Mortgage, a commercial mortgage brokerage offering real estate investors a wide range of resources to help them in their investment activities.
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Mortgage Loan Market Commentary
This week brings us the release of several important economic reports for the mortgage market to digest. Monday kicks off with the release of March’s Personal Income & Outlays. This report helps us measure consumers’ ability to spend and current spending habits, which is important to the mortgage market due to the influence that consumer spending related information has on the financial markets. If a consumer’s income is rising, he is more likely to make additional purchases. This raises inflation concerns and has a negative affect on the bond market and mortgage rates. Current forecasts are calling for 0.5% increases in spending and income.
The Institute for Supply Management (ISM) will post their manufacturing index late Tuesday morning. This is one of the first important reports released each month and gives us an indication of manufacturer sentiment. A reading above 50 means that more surveyed trade executives felt business improved during the month than those who felt it had worsened. This points toward more manufacturing activity and could hurt bond prices, pushing mortgage rates higher. But, if we see a drop from last month’s reading of 50.9, the bond market should thrive and mortgage rates will probably fall. It is expected to show a reading of 51.0.
Wednesday’s sole report is March’s Factory Orders at 10:00AM. This is a fairly important release because it measures manufacturing sector strength. It is similar to last week’s Durable Goods Orders, except this report includes non-durable goods such as food and clothing. Generally, the market is more concerned with the durable goods orders like refrigerators and electronics than items such as cigarettes and toothpaste. This is why the Durable Goods report usually has more of an impact on the financial markets than the Factory Orders report does. Still, a smaller increase than the 1.0% that is expected could push mortgage rates slightly lower, while a larger increase will likely lead to higher rates.
The Labor Department will release its 1st Quarter Productivity and Costs report early Thursday morning. This information helps us measure employee productivity in the workplace. High levels of productivity help allow low-inflationary economic growth. If employee productivity is rising, the bond market should react favorably. However, a decrease could raise inflation concerns that cause bond prices to drop and mortgage rates to rise Thursday morning. It is expected to show a 1.1% increase in productivity.
The week’s most important release is being saved for last. The almighty Employment Report will be released Friday at 8:30AM, giving us April’s employment statistics. This is where we may see a huge rally or major sell-off in the bond market and large changes in mortgage rates. The ideal situation for the bond and mortgage markets would be an increase in the unemployment rate and fewer than expected new payrolls. If we are not so lucky, we may still see an improvement to mortgage pricing if we get weaker than expected readings. Just how much of an improvement or worsening depends on how much variance there is between forecasts and actual readings. This could turn out to be a wonderful day in the mortgage market, but it also carries risks of seeing mortgage rates move higher if the Labor Department posts stronger than expected readings. Current forecasts are calling for a 4.5% unemployment rate and approximately 100,000 new jobs.
Overall, look for plenty of movement in mortgage rates this week. I expect to see the biggest changes either Tuesday or Friday morning. The single most important report is Friday’s employment numbers and they will be the key as to whether we see mortgage rates move higher or lower for the week.
Craig S. Higdon, “The Investment Property Insider”
www.ExcelsionMortgage.com, www.InvestmentPropertyInsider.com
Craig Higdon has over 14 years experience in financing commercial loans, small business loans, construction loans, and land loans. He owns Excelsion Mortgage, a commercial mortgage brokerage offering real estate investors a wide range of resources to help them in their investment activities.
This entry was posted on Sunday, April 29th, 2007 and is filed under -Mortgage Loan Market Commentary. You can follow any responses to this entry through RSS 2.0. You can leave a response, or trackback from your own site.