So the heat is on - and will stay on for the week ahead. The volatile Stock earnings season continues, and as if that weren't enough, the economic calendar also holds several big potential market movers.
Lots of economic reports are due for delivery this week, including Tuesday's look at the Fed's favorite measure of inflation, the Personal Consumption Expenditure index, and wrapping up with a bang on Friday with the monthly Jobs Report. If the week's inflation numbers meet or are lower than expectations while the data for the economy is worse than expected, Bond prices should continue their recent upward trend and home loan rates will improve. However, if the reports reek of inflation or an overheated economy, Bond prices could quickly lose their recent gains, and home loan rates will worsen.
The chart below shows how Bonds moved higher over the past week - and remember, when Bonds move higher, home loan rates move lower. And if the news is cooperative, they might just continue their climb, as the Stochastic Oscillator shows continued buying pressure for Bonds. The what?? Although it may sound like some invention created by a green dog in a Dr. Suess book, the Stochastic Oscillator can actually be a very telling measure of upcoming trends, in this case for Bonds and home loan rates. The lower part of the chart below shows how the Stochastic Oscillator simply indicates if there is more buying or selling pressure for Bonds, and also can indicate when Bonds are "overbought" or "oversold", and ripe to reverse. For now, it tells us that Bond buying is on the rise - and if this continues, will help Bond pricing get higher and home loan rates improve.
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