Remember the Misdirection Play in Football?

That's what the US economy will be showing most of us over the next several weeks. Consumer sentiment will most likely improve for no other reason than Americans in our every here-and-now attitude don't like dealing with prolonged stresses. All the while large public companies (mostly banks) will be looking at another round of funding to keep their bloated balance sheets afloat. I believe we'll have one last sinking ship before this economy turns some time in 2010'.

Release Date & Time
Economic Indicator
Consensus Estimate
My Analysis

Tue. April 28, 9:00 a.m. ET
First day of a two-day Fed meeting

Tue. April 28, 10:00 a.m. ET
Apr. Consumer Confidence
30.0 vs. last 26.0
While welcome – the expected uptick as mentioned above in the consumer confidence index will likely take a distant back-seat to this afternoon’s big 5-year note Treasury auction.

Tue. April 28, 1:00 p.m. ET
Treasury auctions $35 bil. of
5-year notes
The yield on this security is just a whisper below 2.0% -- a level likely high enough to draw solid bids from both domestic and foreign investors. If so, this event will tend to be supportive of steady lower mortgage note rates.
Those of you floating your mortgage pipelines will be pleased. You should expect a heavy discount in investor rate sheets today.

Wed. April 29, 8:30 a.m. ET
1st estimate of Q1
Gross Domestic Product
-5.0% vs. last -6.3%
It is broadly expected GDP will post its first back-to-back quarterly decline in more than 50 years. That’s the bad news. The good news is that the pace of decline is abating – with a large part of the Q1 drop driven by inventory reduction. The massive inventory reduction expected for Q1 will likely set the stage for an improvement in the manufacturing sector in the second half of the year. A GDP reading of -5.0% is already priced into the fixed income markets. It will likely take an unexpected reading of -4.8% or better to put any upward pressure on interest rates.

Wed. April 29, 1:00 p.m. ET
Treasury auctions $26 bil. of
7-year notes
The result of this auction will likely exert a significant amount of pressure on the trend trajectory of mortgage interest rates for the balance of the week. A well bid auction will tend to support steady to lower bond & mortgage note rates while a poorly bid auction will probably lead investors to nudge those rates a small increment higher.

Wed. April 29, 2:15 p.m. ET
The Fed releases its post-meeting statement
No change to short-term interest rates
The Fed’s post-meeting statement will probably not be upbeat about the economy’s near-term prospects, which remain clouded by continued deterioration in the labor market. There is only a minuscule chance the Fed might choose to expand its plans to purchase mortgage-backed securities or Treasury obligations. Overall, this meeting will likely be a non-event with respect to its impact on the trend trajectory of mortgage interest rates.

Thurs. April 30, 8:30 a.m. ET
Initial jobless claims for the week ended 4/25
Up 2,000
This time around first-time jobless benefit claims are expected to post a very small increase. For most investors it is still too early to conclude the worst of this recession’s employment erosion is behind us. Look for this data to have little, if any meaningful impact on the mortgage market today.

Thurs. April 30, 8:30 a.m. ET
Q1 Employment Cost Index
+0.4% vs. last +0.5%
It is highly likely the sharp job losses of the past three months have resulted in a virtually non-existent increase in the employment cost index. Investors will likely give this data little more than a passing glance.

Thurs. April. 30, 8:30 a.m. ET
Mar. Personal Income
Spending
PCE Index
-0.2% vs. last -0.2%
-0.1% vs. last +0.2%
0.0% vs. last +0.2%
If, as expected, the spending and personal consumption expenditure index (one of the Fed’s favorite measures of inflation at the consumer level) match or fall below the fore casted values this report will be supportive of steady to fractionally lower rates.

Fri. May 1, 10:00 a.m. ET
Mar. Factory Orders
-0.8% vs. last +1.8%
This stale data will likely have no impact on the equity markets.

Fri. May 1, 10:00 a.m. ET
Apr. Institute of Supply Mgmt.
38.0 vs. last 36.3
The modest expected uptick in manufacturing is not likely strong enough to cause much, if any concern among market watchers.