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Economic Calendar for the Week of April 28 – May 02

Existing Home Sales met expectations, but New Home Sales numbers for March were worse than expected, possibly due to the large increase in the costs for materials needed to construct a home. But then there was a change in climate on Friday, as inflation news from around the World created some strong adverse headwinds for Bonds and home loan rates. Overall, home loan rates ended the volatile week unchanged to slightly higher.

Now is still a good time to take advantage of historically low home loan rates before more inflation talk pushes them higher.

After last week's relatively slow economic news calendar, things will heat up this week with several events that have the potential to move the market. On Wednesday, the Fed will announce their interest rate decision...and then the very next day, the Fed's most favored gauge of inflation will be released, the Personal Consumption Expenditure Index (PCE). It will be interesting to play armchair quarterback to the Fed's decision, and watch what the inflation numbers reveal! And let's not forget, on Friday we will see the important Jobs Report, where early estimates are for a net loss of 80,000 jobs.

As you can see in the chart below, Bond prices ended the week between a technical "floor of support" at the 200-day Moving Average and an overhead "ceiling of resistance" at the 50-day Moving Average...and that ceiling might just stop any improvement for Bonds and home loan rates for the short term, unless the news of the week is really Bond-friendly. We'll have to wait and see if the week's upcoming news leads to calm or stormy times ahead.

Chart: Fannie Mae 5.5% Mortgage Bond (Friday Apr 25, 2008)

Japanese Candlestick Chart