Mortgage bond prices finished the week lower which put upward pressure on rates.  There was no data the first part of the week.  Existing home sales printed at 5.42M units which was near expectations.  The 2Y and 10Y yield curve inverted again last week which can be a recession warning if it stays that way.  An inverted curve occurs when interest rates on short-term bonds are higher than the interest rates on long-term bonds.  Some traders believe the Fed may be too late with the recent rate cut.  Weekly jobless claims printed at 209K and continuing claims, a summation of all receiving benefits, at 1,674K. Claims were expected at 217K and continuing claims at 1,726K.  Leading economic indicators rose 0.5% and new home sales printed at 635K units.  Mortgage interest rates finished the week worse by approximately 1/8th of a discount point.


Economic IndicatorRelease Date & TimeConsensus EstimateAnalysis
Durable Goods OrdersMonday, Aug. 26,
8:30 am, et
Up 2.1%Important.  An indication of the demand for “big ticket” items.  Weakness may lead to lower rates.
FHFA House Price IndexTuesday, Aug. 27,
10:00 am, et
Up 0.3%Moderately Important.  A measure of single family house prices.  Weakness may lead to lower rates.
Consumer ConfidenceTuesday, Aug. 27,
10:00 am, et
135Important.  An indication of consumers’ willingness to spend.  Weakness may lead to lower mortgage rates.
Q2 GDPThursday, Aug. 29,
8:30 am, et
Up 2%Very important.  The aggregate measure of US economic production.  Weakness may lead to lower rates.
Weekly Jobless ClaimsThursday, Aug. 29,
8:30 am, et
216KImportant.  An indication of employment.   Higher claims may result in lower rates.
Personal Income and OutlaysFriday, Aug. 30,
8:30 am, et
Up 0.3%,
Up 0.2%
Important.  A measure of consumers’ ability to spend.  Weakness may lead to lower mortgage rates.
PCE Core InflationFriday, Aug. 30,
8:30 am, et
Up 0.2%Important.  A measure of price increases for all domestic personal consumption.  Weaker figure may help rates improve.
U of Michigan Consumer SentimentFriday, Aug. 30,
10:00 am, et
92Important.  An indication of consumers’ willingness to spend.  Weakness may lead to lower mortgage rates.

Fed MBS Reinvestment

The Fed continues to spend billions of dollars monthly to keep mortgage interest rates low and help the housing market.  To ensure the transparency of its agency mortgage-backed securities transactions, the Open Market Trading Desk at the New York Fed publishes historical operational results.  Operational results include agency MBS transactions associated with additional asset purchases and reinvestment of principal payments from agency debt and agency MBS in agency MBS, as directed at times by the Federal Open Market Committee (FOMC), as well transactions associated with small value exercises.

The Desk plans to purchase approximately $5.3 billion in its reinvestment purchase operations from August 14 to September 13, 2019. The next release of tentative purchase amounts in agency MBS will be at 3 p.m. on September 13, 2019.  The amounts published are based on already announced FOMC decisions and make no assumptions about future policy actions.