So, After the Stock Market Sell-off – Where do we Stand?

Market Comment 8/24/15

Mortgage bond prices finished last week higher which pushed rates lower. Stock weakness dominated headlines. The DOW fell over 700 points for the week and 358 points Thursday alone. Economic data was mixed. Consumer prices rose 0.1% versus the expected 0.2% increase. The core, which excludes volatile food and energy, rose 0.1% versus the expected 0.2% increase. Weekly jobless claims were 277K versus the expected 272K. Leading Economic Indicators fell 0.2% versus the expected 0.2% increase. Philadelphia Fed business conditions were better than expected. Mortgage interest rates finished the week better by about 1/4 to 3/8 of a discount point.

LOOKING AHEAD

Economic
Indicator
Release
Date & Time
Consensus
Estimate

Analysis
FHFA House Price Index Tuesday, Aug. 25,
10:00 am, et
Up 0.5% Moderately Important. A measure of single family house prices. Weakness may lead to lower rates.
New Home Sales Tuesday, Aug. 25,
10:00 am, et
505K Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
Treasury Auctions Begin Tuesday, Aug. 25,
1:15 pm, et
None Important. 2Y Notes on Tuesday, 5Y Notes on Wednesday, and 7Y Notes on Thursday.
Durable Goods Orders Wednesday, Aug. 26,
8:30 am, et
Down 1.5% Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates.
Consumer Confidence Wednesday, Aug. 26,
10:00 am, et
89 Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Weekly Jobless Claims Thursday, Aug. 27,
8:30 am, et
272K Important. An indication of employment. Higher claims may result in lower rates.
Q2 GDP Thursday, Aug. 27,
8:30 am, et
Up 2.2% Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.
Personal Income and Outlays Friday, Aug. 28,
8:30 am, et
Up 0.3%,
Up 0.3%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
PCE Core Inflation Friday, Aug. 28,
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, Aug. 28,
10:00 am, et
92.8 Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

Fed Says

The minutes from the last Federal Reserve Open Market Committee meeting alleviated fears of a Fed rate increase in September. “The Committee agreed to continue to monitor inflation developments closely, with almost all members indicating that they would need to see more evidence that economic growth was sufficiently strong and labor markets conditions had firmed enough for them to feel reasonably confident that inflation would return to the Committee’s longer-run objective over the medium term. The Committee concluded that economic conditions warranting an increase in the target range for the federal funds rate had not yet been met. Members generally agreed that additional information on the outlook would be necessary before deciding to implement an increase.”

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