MARKET COMMENT
Mortgage bond prices finished the week near unchanged to slightly higher which kept rates relatively flat. Trading was quiet throughout most of the week with some slight weakness Thursday afternoon. European leaders agreed to a historic 1.85 trillion-euro budget and coronavirus rescue package after five days of talks in Brussels. European and US Stocks generally reacted favorably to the announcement but saw selling the latter portion of the week. The FHFA housing index fell 0.3% vs the expected unchanged reading. Existing home sales were 4.72M vs the expected 4.7M. Weekly jobless claims were 1.416M vs 1.31M. New home sales were 776K vs 680K. Mortgage interest rates finished the week near unchanged to better by approximately 1/8 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Durable Goods Orders | Monday, July 27, 8:30 am, et | Up 6.2% | Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates. |
| Consumer Confidence | Tuesday, July 28, 10:00 am, et | 96.3 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| Fed Meeting Adjourns | Wednesday, July 29, 2:15 pm, et | No rate changes | Important. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting. |
| Weekly Jobless Claims | Thursday, July 30, 8:30 am, et | 1.36M | Important. An indication of employment. Higher claims may result in lower rates. |
| Q2 GDP | Thursday, July 30, 8:30 am, et | Down 3.5% | Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| Personal Income and Outlays | Friday, July 31, 8:30 am, et | Up 0.3%, Up 5.1% | Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
| PCE Core Inflation | Friday, July 31, 8:30 am, et | Up 0.2% | Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve. |
| Q2 Employment Cost Index | Friday, July 31, 8:30 am, et | Up 0.7% | Very important. A measure of wage inflation. Weakness may lead to lower rates. |
| U of Michigan Consumer Sentiment | Friday, July 31, 10:00 am, et | 73.2 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
FED MEETING
There is little debate that the Federal Reserve will keep rates unchanged at the meeting this week. The Fed has done a solid job the past few months stabilizing the mortgage-backed securities market through their daily MBS purchases. They have successfully helped mortgage interest rates decrease at a slow and steady pace.
The big takeaway from the meeting this week will be any forward guidance the Fed provides. Mortgage interest rates are historically low but economic weakness, unemployment, and looming mortgage delinquencies have many people concerned. The Fed will likely point to the coronavirus and uncertainty ahead. Positive or negative developments regarding the virus could cause the Fed to adjust course rapidly. Now is a great time to take advantage of the favorable rates.