Tuesday, July 22, 2008

This Week's Economic Figures....Lot's of Data, little value.

Stock movements, Oil, regulation push from Hank Paulson (America's Treasury Secretary) on Fannie and Freddie matters, as well as financial updates from our nations largest banks (Wachovia due out today) are going to drive residential mortgage pricing this week more than any of these macro-economic reports. That said, this country continues to slide into recession, regardless of the two day run we witnessed last week in the stock market.



Release Date & Time
Economic Indicator
Consensus Estimate
Analysis

Mon. July 21, 10:00 a.m. ET
June Leading Indicators
-0.1% vs. last +0.1%
This second tier report drew nothing more than a passing glance from mortgage investors.

Tue. July 22, 1:00 p.m. ET
Treasury auctions 20-year inflation-indexed securities
The “adjustable” feature of this offering will likely make it attractive to a broad range of investors. As witnessed, this had no discernible impact on the direction of mortgage interest rates today. If fact we opened lower and continue to trend lower still.

Wed. July 23, 1:00 p.m. ET
Treasury auctions
2-year notes
A solid auction with good foreign investor participation will likely be considered an omen that not only is confidence returning to dollar denominated assets -- but the prospects of a near-term rate hike from the Fed remains extremely low. If this auction goes well, it will tend to be supportive of steady to perhaps fractionally lower mortgage interest rates.

Wed. July 23, 2:00 p.m. ET
Fed releases latest “Beige Book” data
Named for the color of its cover, this compilation of economic data from all 12 Federal Reserve Districts is expected to show generally sluggish growth across the country and anecdotal evidence of an uptick in inflation pressures at both the wholesale and consumer levels. Nothing in this report will likely surprise anyone – so its impact on the direction of mortgage interest rates will probably be minimal to non-existent.

Thurs. July 24, 8:30 a.m. ET
Initial jobless claims for the week ended 7/19
Up 9,000
Most investors tend to discount some of the jobless claims data this time of year to compensate for the volatility surrounding auto manufacturers’ temporary plant shutdowns for new model year retooling. An increase of 9,000 or more new jobless claims will tend to support steady to perhaps fractionally lower mortgage interest rates. If jobless claims fell last week look for investors to push mortgage note rates higher. My take here, it will be higher and while and we shall see headline news in this area.

Thurs. July 24, 10:00 a.m. ET
June Existing Home Sales
Down 1.2%
The expectation for another puny existing home sales number from the National Association of Realtors is already priced into the mortgage market – probably making it a “yawner” as far as most investors are concerned. In the off-chance the Realtors report a month-over-month gain for existing home sales – look for mortgage interest rates to move higher.

Thurs. July 24, 1:00 p.m. ET
Treasury auctions
5-year notes
Given the big run-up in yields last week – I look for this offering to be well received by market participants.

Fri. July 25, 8:30 a.m. ET
June Durable Goods Orders
-0.3% vs. last 0.0%
The modest decline in the June Durable Goods Orders figure was likely created by significant weakness in transportation orders. It really does not matter much – since this data is unlikely to have a notably impact on the trend trajectory of mortgage interest rates today.

Fri. July 25, 10:00 a.m. ET
June New Home Sales
Down 1.8%
Home Builders continue to find it difficult to reduce their inventories. As long as this number remains negative -- it will likely have little impact on the direction of mortgage interest rates. In the off-chance that new home sales post a positive number expect investors to react by pushing note rates higher and prices lower.

Mon. July 28
No releases.

Have a great week. Keep an eye on the developments of Fannie and Freddie. I am not sure their powerful lobbyist' contingencies are going to keep them out of regulation any longer. They simply failed to keep the cash aside over the last few years run up for anyone to feel comfortable in allowing themselves to be self-managed.