Market Comment
Mortgage bond prices finished the week higher which helped rates improve. Trading remained volatile. Rates worsened ahead of the Fed meeting Wednesday. The Fed raised rates 75 basis points as expected. Data that signaled the economy is in a recession reversed the rate spikes seen earlier in the week. GDP fell 0.9% vs the expected 0.5% decrease. The rest of the data was mixed. FHFA housing prices rose 1.4% as expected. Consumer Confidence was 95.7 vs 95.6. New Home Sales were 590K vs 650K. Durable goods orders rose 1.9% vs the expected 0.2% decline. Weekly jobless claims were 256K vs 255K. Personal income rose 0.6% as expected. Spending rose 1.1% vs 0.9%. Core PCE prices rose 0.6% as expected. Employment cost index rose 1.3% vs 1.2%. Mortgage interest rates finished the week better by approximately 1/8 to 1/4 of a discount point.
Looking Ahead
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Construction Spending | Monday, Aug. 1, 10:00 am, et |
Up 0.3% | Low importance. An indication of economic strength. Significant weakness may lead to lower rates. |
| ISM Index | Monday, Aug. 1, 10:00 am, et |
52.9 | Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates. |
| ADP Employment | Wednesday, Aug. 3, 8:30 am, et |
218K | Important. An indication of employment. Weakness may bring lower rates. |
| Factory Orders | Wednesday, Aug. 3, 10:00 am, et |
Up 0.4% | Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
| Weekly Jobless Claims | Thursday, Aug. 4, 8:30 am, et |
245K | Important. An indication of employment. Higher claims may result in lower rates. |
| Trade Data | Thursday, Aug. 4, 8:30 am, et |
$82.2B deficit | Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates. |
| Employment | Friday, Aug. 5, 8:30 am, et |
3.6%, Payrolls +255K |
Very important. An increase in unemployment or weakness in payrolls may bring lower rates. |
ADP Employment
The ADP employment report is a measure of employment derived from data of roughly 500,000 US businesses. The survey focuses on the private sector of the economy. In contrast, the Bureau of Labor Statistics releases the regular employment report which includes both private and government employment statistics.
The Fed is usually focused on inflation. Tightening employment conditions can result in wage inflation. The ADP report provides solid data on these conditions. Despite this, the data can still diverge from the regular employment report. The employment report is derived from a household survey and an establishment survey. These surveys often differ from one another and from the ADP employment report in that they are based on different data sets.
Rates remain volatile. Be cautious heading into the data this week.
