Learn from the Past
Mortgage backed securities (MBS) gained 47 basis points from last Friday’s close which caused fixed mortgage rates to move lower compared to the prior week.
Manufacturing: August Headline Durable Goods Orders were a big miss with a small MOM gain of 0.4% vs. estimates of 1.5%. Ex Transportation, it was also a 0.4% gain vs. estimates of 1.2%. The one bright spot was Ex-Defense which was up 0.7% vs. estimates of 0.1%. The September Richmond Fed Manufacturing Index came in at 21 vs. estimates of 18
Jobs, Jobs, Jobs: Initial Weekly Jobless Claims increased by 870K vs. estimates of 843K. The 4 week moving average is now 878.25K. Continuing Claims are 12.580M vs. estimates of 12.339M.
Taking it to the House:
– August New Home Sales hit an annualized pace of 1.011M units which beat out forecasts of 890K.
– Weekly Mortgage Applications increased by 6.8%.
– Refinances surged by 9.0% and Purchase Applications were a respectable 3.0%.
– The July FHFA Housing Price Index showed a 1.0% monthly increase, which was double the market expectations of 0.5%.
– August Existing Home Sales hit 6.00M vs. estimates of 6.00M which was a 2.4% increase over July’s pace. It was the highest pace since 2006, but in 2006 there was almost twice as much inventory available.
The Talking Fed
Fed Chair Powell spoke three times on Capital Hill last week. His message was clear that the Fed needed Fiscal Stimulus from the Government to help spur the economy forward.
What’s on the Agenda for this Week?
This week is a very big week in terms of economic data, speeches and geopolitical news.
The three areas that have the greatest ability to impact backend pricing this week are: (1) Jobs, Jobs, Jobs, (2) The Talking Fed and (3) Domestic Flavor.
(1) Jobs, Jobs, Jobs: There is a deluge of job and wage related data this week with ADP Private Payrolls, Initial Weekly Jobless Claims, Personal Income, Challenger Job Cuts, Non-Farm Payrolls, Average Hourly Earnings, Unemployment rate and more.
(2) The Talking Fed: There will be a lot of speeches this week and, while the market has been beaten over the head with pretty much non-stop Powell last week, experts will be looking for any divergent views from this week’s speeches.
09/29: John Williams, Richard Clarida, Randal Quarles
09/30: Michele Bowman
10/01: John Williams
(3) Domestic Flavor: This is a big week for some big name economic reports. The biggest are PCE (the Fed’s key inflation measure), ISM Manufacturing, and Chicago PMI Manufacturing. Also, the revised 2nd quarter GDP will be issued (third time seeing that data point).