Good Afternoon,
I am expecting a very volatile week in regards to mortgage interest rates. There are six important economic reports along with more corporate earnings releases and the minutes from the last FOMC meeting. The 10-year bond yield opened in positive territory this morning and brought rates slightly higher because of Friday. Right now it’s gone back down to 3.87%. The financial worries are continuing to grow and investors are not completely convinced that the government’s plan to help Fannie Mae and Freddie Mac will help other areas of the financial industry.
Here is what is coming up this week in regards to important economic news:
-Tuesday – June’s Producer Price Index (PPI) - is scheduled to be released by the Labor Department tomorrow morning. Inflationary pressures are measured at the producer’s level through this index, which is why this the most important report for this week. Keep an eye on the “core” data: if it shows prices rising rapidly, bond prices may go down and interest rates will continue to go up. A large increase implies inflation is a real threat to the economy because the higher prices will likely be passed on to the consumer.
* Consensus (PPI – M/M change: 1.4%)
* Consensus (PPI less food and energy: 0.3%)
-Tuesday – June’s Retail Sales report – This is a very important report due to the fact that consumer spending makes up two-thirds of the U.S. economy. If the PPI report shows a smaller than expected increase in sales could help the bond market and as a result lower interest rates. A greater than expected increase in sales could hurt bonds and as result raise interest rates.
* Consensus – 0.5%
- Tuesday and Wednesday – Fed Chairman Bernanke to speak before the Senate Banking Committee and the House Financial Services Committee - What is said at these 2 meetings will mostly likely cause whole lot of volatility. An inflationary concern is what to look for. Inflation helps to increase mortgage rates.
Simply Put: Keep your eyes on prices, sales and the Fed about inflationary concerns. I expect a lot of movement this week.
Should I lock if I’m closing or plan to remortgagewithin:
- 15 days? YES
- 30 days? YES
- 45 days? NO
- 60 days? NO
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