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Market Comment
Mortgage bond prices rose last week pushing mortgage interest rates lower. Trading was dominated by foreign influences as the Greek debt concerns spread throughout Europe. Analysts point to Spain and Portugal as additional areas of concern. Fortunately, this sent global investor funds into US Treasury bonds and mortgage-backed securities. This flight to quality buying helped rates improve this week. Weekly jobless claims came in as expected.
Rates fell by about 3/8 of a discount point for the week.
The employment report to be released Friday will be the most important event this week. The productivity data to be released Thursday also is a major release. It is important to remember that data releases often result in mortgage interest rate volatility.
LOOKING AHEAD
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Economic
Indicator
|
Release
Date & Time
|
Consensus
Estimate
|
Analysis
|
| Personal Income and Outlays |
Monday, May 3,
8:30 am, et
|
Up 0.2%
Up 0.6% |
Important. A measure of consumers' ability to spend. Weakness may lead to lower mortgage rates. |
| ISM Index |
Monday, May 3,
10:00 am, et
|
59.6 |
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates. |
| Factory Orders |
Tuesday, May 4,
10:00 am, et
|
Down 0.8% |
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
| ADP Employment |
Wednesday, May 5,
8:30 am, et
|
Jobs +20K |
Important. An indication of employment. A large decrease in payrolls may bring lower rates. |
| Preliminary Q1 Productivity |
Thursday, May 6,
8:30 am, et
|
Up 3.1% |
Important. A measure of output per hour. Improvement may lead to lower mortgage rates. |
| Employment |
Friday, May 7,
8:30 am, et
|
Jobs +175K
Umemp @ 9.7% |
Very important. An increase in unemployment or a large decrease in payrolls may bring lower rates. |
Income and Outlays
The personal income and outlays release is a monthly report issued by the Bureau of Economic Analysis (BEA). The data is important because it is thought to provide a solid indication of future consumer demand. The personal income component is primarily a measure of wages and salaries. The outlays component is primarily a measure of spending on goods and services. Together the figures provide analysts valuable insight into consumer economic standing and consumption.
The prior release showed wages and salaries were unchanged. Future decreases could adversely affect consumer spending and the entire US economy. Decreased or stagnant wages coupled with tighter borrowing restrictions make it difficult for consumers to spend money.
It is important to note that no single economic indicator can consistently predict the future of the economy. However, the personal income and outlays report is a closely watched release. The consumer remains a vital component of the US economy.
Now is a good time to take advantage of mortgage interest rates at their current levels to avoid exposure to future market volatility.
Copyright 2010. All Rights Reserved. Mortgage Market Information Services, Inc. www.ratelink.com The information contained herein is believed to be accurate, however no representation or warranties are written or implied.
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