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Mortgage bond prices finished the week lower, which pushed rates higher. Stock volatility dominated headlines. The DOW fell over 600 points Monday morning, which initially helped rates improve. Stocks recovered later in the week and mortgage rates worsened.
The data was generally not rate friendly. New home sales were 507K versus the expected 500K. Consumer sentiment was 101.5 versus the expected 93.1 mark. Durable goods orders rose 2.0%. Analysts expected a 0.6% decrease. Mortgage interest rates finished the week worse by about 1/8 to 1/4 of a discount point.
Fed "Beige Book"
The Fed "Beige Book" is a summary of economic conditions from each of the 12 Federal Reserve regional districts. The release takes place eight times a year approximately two weeks ahead of each of the Federal Open Market Committee meetings. The report is used at the FOMC meetings, which tends to be one of the most influential events in the market.
Market participants are continually attempting to determine what FOMC interest rate policy will be ahead of the next meeting. Any deviation from expectations usually results in extreme short-term market volatility. The timing of the "Beige Book" provides analysts a valuable look at one of the many factors the FOMC considers in setting interest rate policy. The Fed's ability to keep rates lower may be somewhat restricted if the "Beige Book" shows signs of economic growth and inflationary pressures. However, if the report shows signs of difficulties, the Fed may keep rates low to stimulate the economy. Be cautious heading into this release.
LOOKING AHEAD
Economic
Indicator |
Release
Date & Time |
Consensus
Estimate |
Analysis
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ISM Index |
Tuesday, Sept. 1,
10:00 am, et |
52.9 |
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates. |
ADP Employment |
Wednesday, Sept. 2,
8:30 am, et |
185K |
Important. An indication of employment. Weakness may bring lower rates. |
Revised Q2 Productivity |
Wednesday, Sept. 2,
8:30 am, et |
Up 1.1% |
Important. A measure of output per hour. Improvement may lead to lower mortgage rates. |
Factory Orders |
Wednesday, Sept. 2,
10:00 am, et |
Up 1.3% |
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
Fed "Beige Book" |
Wednesday, Sept. 2,
2:00 pm, et |
None |
Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates. |
Weekly Jobless Claims |
Thursday, Sept. 3,
8:30 am, et |
273K |
Important. An indication of employment. Higher claims may result in lower rates. |
Trade Data |
Thursday, Sept. 3,
8:30 am, et |
$42B deficit |
Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates. |
Employment |
Friday, Sept. 4,
8:30 am, et |
5.3%,
Payrolls +222K |
Very important. An increase in unemployment or weakness in payrolls may bring lower rates. |
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