Market Comment
Mortgage bond prices finished the week slightly lower which put upward pressure on rates. The up and down trading pattern continued as inflation fears remained heightened. Some of the data showed the impacts of higher rates on the economy. Existing home sales were 4.07M vs 4.15M. However, new home sales were 714K vs 705K. Oil prices slid mid-week as indications across the globe showed a slowdown in manufacturing activity. Durable goods fell 5.2% vs the expected 4% decline. Weekly jobless claims were 230K vs 240K. Consumer sentiment was 69.5 vs 71.2. Mortgage interest rates finished the week worse by approximately 1/8 of a discount point.
Looking Ahead
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| FHFA House Price Index | Tuesday, Aug. 29, 10:00 am, et |
Up 0.9% | Moderately Important. A measure of single-family house prices. Weakness may lead to lower rates. |
| Consumer Confidence | Tuesday, Aug. 29, 10:00 am, et |
116 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| ADP Employment | Wednesday, Aug. 30, 8:15 am, et |
188K | Important. An indication of employment. Weakness may bring lower rates. |
| Q2 GDP | Wednesday, Aug. 30, 8:30 am, et |
Up 2.4% | Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| Weekly Jobless Claims | Thursday, Aug. 31, 8:30 am, et |
225K | Important. An indication of employment. Higher claims may result in lower rates. |
| Personal Income and Outlays | Thursday, Aug. 31, 8:30 am, et |
Up 0.3%, Up 0.7% |
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
| PCE Core Inflation | Thursday, Aug. 31, 8:30 am, et |
Up 0.2% | Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve. |
| Employment | Friday, Sept. 1, 8:30 am, et |
3.5%, Payrolls +170K |
Very important. An increase in unemployment or weakness in payrolls may bring lower rates. |
| ISM Index | Friday, Sept. 1, 10:00 am, et |
47 | Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage 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. Rates remain volatile. Be cautious heading into the data this week.
