![Mortgage Investors Group in [Dynamic1]](../assets/images/mortgage-investors-group.svg)
Market Comment
Mortgage bond prices finished the week near unchanged which held rates steady. We improved early in the week amid sentiment that the Fed will cut rates a few times this year. Prices sold off slightly mid-week but then finished calmly Friday morning. Trading was back and forth but within a very narrow range amid very few significant economic releases. Leading economic indicators fell 0.6% vs the expected 0.3% decrease. Existing home sales were 3.95M vs 3.93M. Weekly jobless claims were 232K vs 230K which was relatively in line with estimates. New home sales were 739K vs 630K. Mortgage interest rates finished the week with discount points near unchanged.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
|---|---|---|---|
| Durable Goods Orders | Monday, Aug. 26, 8:30 am, et | Up 4% | Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates. |
| FHFA House Price Index | Tuesday, Aug. 27, 10:00 am, et | Up 0.6% | Moderately Important. A measure of single-family house prices. Weakness may lead to lower rates. |
| Consumer Confidence | Tuesday, Aug. 27, 10:00 am, et | 100.1 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| Treasury Auctions Begin | Tuesday, Aug. 27, 1:15 pm, et | None | Important. 2Y Notes on Tuesday, 5Y Notes on Wednesday, and 7Y Notes on Thursday. |
| Q2 GDP | Thursday, Aug. 29, 8:30 am, et | Up 2.8% | Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| Weekly Jobless Claims | Thursday, Aug. 29, 8:30 am, et | 230K | Important. An indication of employment. Higher claims may result in lower rates. |
| Personal Income and Outlays | Friday, Aug. 30, 8:30 am, et | Up 0.2%, Up 0.3% | Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
| PCE Core Inflation | Friday, Aug. 30, 8:30 am, et | Up 0.2% | Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve. |
| U of Michigan Consumer Sentiment | Friday, Aug. 30, 10:00 am, et | 67.8 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
Powell Signals
Fed Chair Powell’s speech last week officially opened the door for rate cuts in the months ahead. Powell said, “Our restrictive monetary policy helped restore balance between aggregate supply and demand, easing inflationary pressures and ensuring that inflation expectations remained well anchored. Inflation is now much closer to our objective, with prices having risen 2.5 percent over the past 12 months.” He continued, “Overall, the economy continues to grow at a solid pace. But the inflation and labor market data show an evolving situation. The upside risks to inflation have diminished. And the downside risks to employment have increased. As we highlighted in our last FOMC statement, we are attentive to the risks to both sides of our dual mandate.”
The markets specifically focused on the portion of his speech which remarked, “The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”
The great news is the Fed has officially signaled they are prepared to pivot on the inflation front. However, they are clear that future data will drive the timing of their moves. A cautious approach to float/lock decisions is prudent in the days and weeks ahead.
