Market Comment
Mortgage bond prices finished the week with a slight negative bias. Rates continued to bounce around within a narrow range throughout most of the week. Fed Chair Powell’s testimony to Congress resulted in some volatility mid-week as anticipated. Powell said he expected more Fed rate hikes ahead as the inflation fight “has a long way to go.” He noted, “inflation is well above” where it should be. Inflation erodes the value of fixed income investments such as mortgage bonds. This causes prices to fall and rates to rise. The data was mixed. Housing starts were 1.631M vs 1.4M. Existing home sales were 4.3M vs 4.28M. LEI fell 0.7% vs down 0.8%. Weekly jobless claims were 264K vs 259K. Mortgage interest rates finished the week worse by approximately 1/8 of a discount point.
Looking Ahead
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Durable Goods Orders | Tuesday, June 27, 8:30 am, et | Down 1.3% | Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates. |
| FHFA House Price Index | Tuesday, June 27, 10:00 am, et | Up 0.4% | Moderately Important. A measure of single-family house prices. Weakness may lead to lower rates. |
| Consumer Confidence | Tuesday, June 27, 10:00 am, et | 104 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| New Home Sales | Tuesday, June 27, 10:00 am, et | 670K | Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
| GDP | Thursday, June 29, 8:30 am, et | Up 1.4% | Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| Personal Income and Outlays | Friday, June 30, 8:30 am, et | Up 0.4%, Up 0.2% | Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
| PCE Core Inflation | Friday, June 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 Sentiment | Friday, June 30, 10:00 am, et | 63.2 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
New Home Sales
New Home Sales data is compiled monthly by the Department of Commerce’s Census Bureau and is gathered from builders throughout the country. The data represents new home sales for the nation as well as four areas of the country: the Northeast, the Midwest, the South, and the West. Information on the average price of a home, the number of homes for sale, and the supply of unsold homes are also provided.
The data is an important indicator because it shows any strength or weakness in the housing sector. The housing sector data is valuable because when consumer spending changes, it appears in this sector first. Consequently, a chain reaction typically occurs. A slowdown in new home sales tends to lead to a slowdown in housing starts, which will continue to affect other indicators possibly continuing the economic worries, as has been the recent concern of most everyone. New Home Sales data is often volatile and difficult to predict. Most analysts look at a three-month average in order to see any trends in the growth rate. The data remains significant in showing the condition of housing.