MMG WEEKLY – WHAT ARE THEY SAYING THIS WEEK?

Forecast for the Week After last week’s holiday-shortened week, there will be plenty of economic reports to watch for.

  • Pending Home Sales will be released on Monday and could have a relatively modest impact on trading.
  • Durable Orders will be delivered on Tuesday. This report gives a look at consumer spending for products that are expected to last at least three years.
  • Another important report will be Consumer Confidence on Tuesday, as the American consumer is a very important player in theU.S. economy.
  • In the manufacturing sector, the Chicago PMI and the ISM Index will be released on Wednesday and Thursday, respectively.
  • The all-important Gross Domestic Product report comes on Wednesday and will give a detailed view on the overall picture of growth in theU.S.
  • Weekly Initial Jobless Claims will be released on Thursday, and last week’s claims remained near four-year lows, signaling that the jobs market could be healing.
  • Finally, the Core Personal Consumption Expenditure (PCE) report will be released on Thursday. This is the Fed’s favorite gauge of inflation.

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. The chart below shows Mortgage Backed Securities (MBS), which are the type of Bond that home loan rates are based on.

When you see these Bond prices moving higher, it means home loan rates are improving – and when they are moving lower, home loan rates are getting worse.

To go one step further – a red “candle” means that MBS worsened during the day, while a green “candle” means MBS improved during the day. Depending on how dramatic the changes were on any given day, this can cause rate changes throughout the day, as well as on the rate sheets we start with each morning.

As you can see in the chart below, roller coaster trading in the markets continues. I’ll continue to monitor this situation closely.

Chart: Fannie Mae 3.5% Mortgage Bond (Friday Feb 24, 2012)

The Mortgage Market Guide View

Economic Calendar for the Week of February 27 – March 02

Date
ET
Economic Report
For
Estimate
Actual
Prior
Impact
Mon. February 27
10:00
Pending Home Sales
Jan
1.0%
2.0%
-3.5%
Moderate
Tue. February 28
08:30
Durable Goods Orders
Jan
-1.4%
 
3.0%
Moderate
Tue. February 28
10:00
Consumer Confidence
Feb
62.5
 
61.1
Moderate
Wed. February 29
08:30
Gross Domestic Product (GDP)
Q4
2.8%
 
2.8%
Moderate
Wed. February 29
08:30
GDP Chain Deflator
Q4
0.4%
 
0.4%
Moderate
Wed. February 29
09:45
Chicago PMI
Feb
60.0
 
60.2
HIGH
Wed. February 29
02:00
Beige Book
Feb
 
 
 
Moderate
Thu. March 01
08:30
Personal Spending
Jan
0.3%
 
0.0%
Moderate
Thu. March 01
08:30
Personal Income
Jan
0.4%
 
0.5%
Moderate
Thu. March 01
08:30
Personal Consumption Expenditures and Core PCE
Jan
0.2%
 
0.2%
HIGH
Thu. March 01
08:30
Personal Consumption Expenditures and Core PCE
YOY
NA
 
1.8%
HIGH
Thu. March 01
08:30
Jobless Claims (Initial)
2/25
355K
 
351K
Moderate
Thu. March 01
10:00
ISM Index
Feb
54.5
 
54.1
HIGH

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