This week's economic calendar is front and back-end loaded with potentially high impact reports. Right out of the gates, Monday brings the Personal Income and Spending report with the imbedded Core Personal Consumption Expenditure Index, the Federal Reserve's most favored gauge of inflation. Expectations are for Core Inflation to be reported at 2.2%, inching closer to the Fed's target of 2% or lower. Not to be outdone, Friday is launch-day for the potentially explosive monthly Jobs Report with the latest data on new job formation, hourly earnings, and the unemployment rate. Estimates for new job creations are presently around 100,000. If either of these reports are out of line - showing more inflation than expected or markedly more jobs than expected - this could cause Bond prices and home loan rates to suffer. And on the flip side - if the reports show low inflation or fewer job creations than anticipated, this could help Bond prices and home loan rates improve. Mortgage Bonds are now trading within a few whiskers of a very important technical floor of support at the 200-day Moving Average. Why is this floor so important? The chart below shows that Bonds have traded above this floor for eight months - and the last time Bonds traded beneath this level, the 200-day MA became a tough overhead ceiling of resistance, putting a lid on Bond prices or home loan rates improving for one and half years. So...if the news of this week forces the Bond beneath this 200-day MA floor of support, it may mean higher home loan rates for a while. Chart: Fannie Mae 5.5%% Mortgage Bond (Friday Apr 27, 2007)
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Forecast for the Week
I got this from several sources but thought the info might help.
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