Mortgage bond prices fell last week, which pushed mortgage interest rates slightly higher. Rates started off on a bad note Tuesday following stock strength and higher than expected housing starts data. Things rebounded a bit Wednesday as European debt concerns dominated the headlines. News that France and Germany reached an agreement Thursday on Greece sent the financial mortgage bond market downward. We saw some negative movements the end of the week tied to significantly stronger stocks. Mortgage bonds ended the week worse by about 1/4 of a discount point.
The Treasury will auction 2Y notes on Tuesday, 5Y notes on Wednesday, and 7Y notes on Thursday. Traders will focus on foreign demand.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Consumer Confidence | Tuesday, July 26, 10:00 am, et | 58.1 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| New Home Sales | Tuesday, July 26, 10:00 am, et | 288k | Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
| Durable Goods Orders | Wednesday, July 27, 8:30 am, et | Up 1.2% | Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates. |
| Fed “Beige Book” | Wednesday, July 27, 2:00 pm, et | None | Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates. |
| Weekly Jobless Claims | Thursday, July 28, 8:30 am, et | 415k | Important. An indication of employment. Higher claims may result in lower rates. |
| Q2 Advance GDP | Friday, July 29, 8:30 am, et | Up 1.8% | Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| Q2 Employment Cost Index | Friday, July 29, 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 29, 10:00 am, et | 63.5 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
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 recession, 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. Surges in the release are often greeted with little more than an average reaction in the bond market. However, the data remains significant in showing the condition of the housing sector of the economy. The housing sector as of late has been a major disappointment but the Fed hopes the low interest rate environment will help.
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