This week brings us the release of only three monthly economic reports that have the potential to influence mortgage rates. None of them are considered to be highly important, so look for the stock markets to be in the forefront of bond trading a good part of the week. I would not be surprised to see stocks pull back from current levels in the near future, probably leading to funds shifting back into bonds as a result. If that is the case and it happens this week, we should see mortgage rates move a little lower on the week despite the lack of any key economic releases.
There is nothing of concern scheduled for release Monday, so look for the stock markets to be the biggest influence on bond trading and mortgage rates. If the stock markets extend last week’s gains, we may see pressure in the bond market and small upward changes to mortgage pricing tomorrow. However, if the week starts off with a weak opening in stocks, bonds and mortgage borrowers should benefit.
August’s Housing Starts will kick-off the week’s data early Wednesday morning. This report will probably not have much of an impact on the bond market or mortgage rates. It gives us a measurement of housing sector strength and mortgage credit demand by tracking construction starts of new homes, but is usually considered to be of low importance to the financial and mortgage markets. It is expected to show an increase in new home starts between July and August. I believe we need to see a significant surprise in this data for it to have a noticeable impact on Wednesday’s mortgage rates.
Wednesday morning also brings us the release of August’s Existing Home Sales report at 10:00 AM ET. The National Association of Realtors posts this data, giving us an indication of housing sector strength by tracking home resales. It is expected to show a small increase from July’s sales, however, this data probably will be neutral towards mortgage pricing unless its results vary greatly from forecasts.
The Conference Board will post its Leading Economic Indicators (LEI) for August late Thursday morning. The LEI index attempts to measure economic activity over the next three to six months. It is expected to show no change from July’s reading, meaning that it is predicting no growth in economic activity over the next several months. An unexpected increase would be considered negative news for bonds and could lead to a minor increase in mortgage rates Thursday.
Overall, there really isn’t a specific report or particular day that stands out as the most important of the week. I don’t believe any of this week’s economic data has the potential to move the markets or mortgage rates heavily. There are many individual speaking engagements by different Fed members, which can cause some fluctuations in the markets if anything unexpected is said. With those and the potential for sizable moves in stocks, we still may see some changes in rates several days this week.