In The News
A Look At The Week Ahead
December 20, 2009 by Wesley Ledford · Leave a Comment
The inflation data will be the most important release this week. The recent inflation reports were mixed. The PCE price index will be carefully watched for any signs of inflationary pressures. The bond market will close early Thursday in advance of the Christmas holiday Friday. The shortened trading week may result in some market volatility coupled with thin trading conditions likely.
| Economic Indicator |
Release Date and Time |
Consensus Estimate |
Analysis |
| Q3 GDP | Tuesday, Dec. 22, 8:30 am, et |
Up 2.7% | Important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| Existing Home Sales | Tuesday, Dec. 22, 10:00 am, et |
Up 3.3% | Low importance. An indication of mortgage credit demand. A significant decrease may lead to lower rates. |
| Personal Income and Outlays | Wednesday, Dec. 23, 8:30 am, et |
Up 0.5%, Up 0.7% |
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
| PCE Price Index | Wednesday, Dec. 23, 8:30 am, et |
Up 0.5%, Core up 0.1% |
Important. A measure of inflation. Weakness may lead to lower rates. |
| U of Michigan Consumer Sentiment | Wednesday, Dec. 23, 10:00 am, et |
73.9 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| New Home Sales | Wednesday, Dec. 23, 10:00 am, et |
Up 2.3% | Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
The Federal Reserve left interest rates unchanged last week as expected. The remarks were mixed and caused some mortgage market uncertainty. The Fed statement indicated, “subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve is in the process of purchasing $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. In order to promote a smooth transition in markets, the Committee is gradually slowing the pace of these purchases, and it anticipates that these transactions will be executed by the end of the first quarter of 2010. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets.” The Fed’s challenge will be stepping out of the mortgage market without causing mortgage interest rates to spike uncontrollably higher. The housing sector is a vital component of the economy. The last thing the Fed needs is for mortgage interest rates to escalate causing the housing sector to suffer. While the most recent data shows positive housing trends across most of the nation, analysts attribute the positive movements to artificially low mortgage interest rates tied to the Fed buying of mortgage bonds. How this will all play out is still very uncertain.
More updates later!
