This Week
Not much to report from last week. It was a short week and as expected, the economic news and was super thin. As discussed in previous postings, when there is an absence of data the Wall Street Warriors scrounge around looking for information to trade on, and often find extra significance in financial events that might ordinarily be overlooked. Raleigh mortgage rates bumped around a bit midweek, but ended up almost exactly where they started.
I have one true concern form last week. The US Treasury auctioned off $13 Billion in 5-year notes, and the level of foreign buying of these notes was much lower than expected. Strong foreign demand for our Bonds has helped keep our US Bond prices high and interest rates low - so the auctions are important to watch.
Watch the stocks! News from other US financial markets showed stocks might be ripe for a move lower. In fact, the S&P 500 has gone almost 1000 trading days without suffering a 10% decline, this is the second longest stretch in history. So something to watch - if Stocks do a back up, Bond prices and home loan rates may benefit, as money flows out of Stocks and into Bonds.
This week
Get READY! Traders will have to be at the top of their game, and be ready to deal with some fast and furious economic calendar action. In the manufacturing sector, we'll have the Durable Goods Orders report on Tuesday, the Chicago Purchase Manager's Index on Wednesday, and the national ISM Index on Thursday. In Housing, we will see Existing Home Sales on Tuesday, New Home Sales on Wednesday, and Construction Spending on Thursday. Other important economic news will include Consumer Confidence on Tuesday, Preliminary 4th Quarter GDP on Wednesday, and the Personal Income and Spending report...and if that weren't enough, the critically significant Personal Consumption Expenditure inflation data on Thursday.
If the news of the week comes in looking like the economy is hot, with higher inflation to match, expect to see Bond prices worsen and home loan rates increase. If the news shows some economic weakness and reduced inflation, Bond prices and home loan rates will improve.
Kevin
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