![Mortgage Investors Group in [Dynamic1]](../assets/images/mortgage-investors-group.svg)
Market Comment
Mortgage bond prices finished the week higher which put downward pressure on rates. The MBS market improved considerably Monday morning in carryover from Fed Chair Powell’s signal the prior Friday regarding possible rate cuts in September. The rest of the week remained very calm with minimal daily changes. The data was mixed. New home sales were 652K vs 630K. FHFA fell 0.2% vs unchanged. Consumer Confidence was 97.4 vs 96.2. GDP rose 3.3% vs 3.1%. The Weekly jobless claims report was near estimates with a reading of 229K vs 230K. Personal income rose 0.4%, Spending was up 0.5%, and Core PCE rose 0.3%, all as expected. Mortgage interest rates finished the week better by approximately 1/2 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| ISM Index | Tuesday, Sept. 2, 10:00 am, et | 48.6 | Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates. |
| Factory Orders | Wednesday, Sept. 3, 10:00 am, et | Down 1.4% | Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
| Fed “Beige Book” | Wednesday, Sept. 3, 2:00 pm, et | None | Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates. |
| ADP Employment | Thursday, Sept. 4, 8:30 am, et | 72K | Important. An indication of employment. Weakness may bring lower rates. |
| Trade Data | Thursday, Sept. 4, 8:30 am, et | $64.2B deficit | Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates. |
| Q2 Productivity | Thursday, Sept. 4, 8:30 am, et | Up 2.4% | Important. A measure of output per hour. Improvement may lead to lower mortgage rates. |
| Employment | Friday, Sept. 5, 8:30 am, et | 4.3%, Payrolls +78K | Very important. An increase in unemployment or weakness in payrolls may bring lower rates. |
ISM Index
The Institute for Supply Management (ISM), formerly the National Association of Purchasing Management (NAPM), releases the “Report on Business” on the first working day of each month. Part of this report is the “diffusion index,” which tracks the economy’s ups and downs well.
In conducting this survey, the ISM questions purchasing executives from over 250 industrial companies compiling data on production, orders, commodity prices, inventories, vendor performance, and employment. Each of the respondents is asked to rank the categories as “up” or “down.” Various weights are applied to the individual components to form the composite index. A composite index reading of 50 can be thought of as a “swing point.” A reading above 50 implies an increase in economic activity, while a reading below 50 indicates a decline. The ISM report is difficult for economists to forecast because there is little data upon which to base an educated guess. The report has a large “surprise factor” and can cause market swings.
Be cautious heading into the data this week. The MBS market has seen extended periods of quiet trading but could be on the edge of volatility with continued fear and uncertainty in the financial markets.
