Weekly Mortgage Commentary-August 26, 2013

This week has five economic reports scheduled for release that are relevant to mortgage rates in addition to two Treasury auctions that can potentially affect rates. There is data being posted four of the five days with Wednesday the only day with nothing scheduled, but none of the reports are considered to be highly important or key data. Still, most of the week’s releases carry enough significance to affect mortgage rates if their results vary from forecasts.

 

The Commerce Department will post July’s Durable Goods Orders early Monday morning, giving us an important measure of manufacturing sector strength. This report tracks orders at U.S. factories for big-ticket items, or products that are expected to last three or more years such as appliances, electronics and airplanes. Analysts are expecting to see a decline of 4.5% in new orders, indicating manufacturing sector weakness. This data is known to be quite volatile from month to month, so a decline of this size doesn’t raise too much concern about the economy. However, a decent sized decline is good news for the bond market and mortgage rates as it means manufacturing activity is likely softening. A secondary reading the excludes more volatile transportation-related orders is expected to rise 0.5%. The softer the reading, the better the news it is for the bond and mortgage markets.

Tuesday also has only one report worth watching. The Conference Board will post their Consumer Confidence Index (CCI) for August at 10:00 AM ET Tuesday. This index measures consumer sentiment about their personal financial situations, which helps us measure consumer willingness to spend. If consumers are feeling more confident in their own finances, they are more apt to make a large purchase in the near future, fueling economic growth. A decline in confidence would indicate that surveyed consumers probably will not be buying something big in the immediate future. That would be a sign of economic weakness and should drive bond prices higher, leading to lower mortgage rates Tuesday. It is expected to show a reading of 77.0, which would be a decline from July’s 80.3. The lower the reading, the better the news for bonds and mortgage rates.

Thursday’s only monthly or quarterly data is the first revision to the 2nd Quarter Gross Domestic Product (GDP) at 8:30 AM ET. The GDP is the total of all goods and services produced in the U.S. and is considered to be the best measurement of economic growth or contraction. This reading is the second of three that we see each quarter. Last month’s preliminary reading revealed that the economy grew at an annual rate of 1.7%. Thursday’s revision is expected to show that the GDP actually rose 2.1%, meaning the economy was stronger than thought from April through June. A smaller than expected reading should help lower mortgage rates, especially if the inflation portion of the release does not get revised higher. There will be a final revision issued next month, but it probably will have little impact on mortgage rates since traders will be more interested in the current quarter’s activity.
Friday is a multi-release day with two pieces of economic data set to be posted. July’s Personal Income and Outlays report is the first at 8:30 AM ET. This data will give us a measure of consumer ability to spend and current spending habits. Rising income means consumers have more money to spend. It is expected to show an increase of 0.1% in income and a 0.3% increase in spending. Since consumer spending makes up over two-thirds of the U.S. economy, weaker than expected numbers would be considered good news for the bond market and mortgage pricing.

The second report of the morning will be the University of Michigan’s revised Index of Consumer Sentiment for August. This sentiment index helps us track consumer willingness to spend similarly to Tuesday’s CCI. It is expected to show no change from August’s preliminary reading of 80.0. If it revises lower, consumers were less confident about their personal financial situations than previously thought. This would be good news for the bond market and mortgage rates because waning confidence usually means that consumers are less likely to make large purchases in the near future. As with the CCI index, the lower the reading the better the news for mortgage shoppers.

Also worth mentioning are a couple of Treasury auctions that may affect bond trading and mortgage rates this week. There auction several days, but the two relevant ones are Wednesday’s 5-year Note and Thursday’s 7-year Note sales. Results of the auctions will be posted at 1:00 PM ET each day. If investor interest is strong in the auctions, we can expect the broader bond market to rally and mortgage rates to move lower. However, lackluster demand could lead to bond selling and higher mortgage rates Wednesday and Thursday afternoons.

Overall, I am expecting to see the most movement in rates Thursday or Friday, but Monday’s Durable Goods report could be the week’s most important report if the GDP shows no surprises. Wednesday looks to be the lightest day with nothing of importance scheduled except the moderately important Treasury auction. We saw bonds rally Friday after a moderately important housing report showed much weaker than expected results. If that momentum can carry into this week’s trading and the data doesn’t show significantly stronger than forecasted results, we could see rates start a downward trend. The yield on the benchmark 10-year Treasury Note fell to 2.82% Friday from 2.90% at Thursday’s close. Look for Monday’s trading to help determine if Friday’s rally was a knee-jerk reaction that cannot be sustained or if the overall tone in the bond market has changed and rates will continue to move lower. Even though none of this week’s economic data is considered to be a market mover, we still should see plenty of activity and movement in rates. Therefore, please proceed cautiously if still floating an interest rate and closing in the near future.

Weekly Mortgage Commenary_August 19, 2013

This week brings us the release of only three pieces of monthly economic data, none of which is considered to be highly important. In addition to the economic data, the minutes from the last FOMC meeting will also be posted. There is nothing of relevance to mortgage rates scheduled for release Monday or Tuesday, so look for the stock markets to drive bond trading and mortgage rates until we get to mid-week.  

 

The first piece of data will be July’s Existing Home Sales report late Wednesday morning. The National Association of Realtors will release this report, giving us a measurement of housing sector strength and mortgage credit demand. It covers a very high percentage of all home sales in the U.S., but usually does not have a major influence on bond trading and mortgage rates unless it varies greatly from analysts’ forecasts. It is expected to show an increase from June’s sales, meaning the housing sector strengthened last month. This would generally be bad news for the bond market and mortgage rates because a strengthening housing sector makes broader economic growth more likely. But unless the increase is much larger than current forecasts, the report will likely have a minimal impact on Wednesday’s mortgage pricing.

Also Wednesday, we will get the minutes from the last FOMC meeting. There is a pretty good possibility of the markets reacting to them following their release. Market participants will be looking for how Fed members voted during the last meeting and any comments about inflation concerns in the economy, economic growth and the Fed’s plans for their current bond buying program (QE3). The goal is to form opinions about when Chairman Bernanke and friends are likely to start tapering their current $85 billion monthly bond purchases. Since the minutes will be released at 2:00 PM ET, if there is a market reaction to them it will be evident during afternoon trading. This is one of those events that can cause significant movement in rates after its release or be a non-factor, so be prepared for a move, but not surprised if the impact on rates is minimal.

The Conference Board is a New York-based business research group that will post its Leading Economic Indicators (LEI) for July late Thursday morning. This index attempts to measure economic activity over the next three to six months and is considered to be moderately important. A higher than expected reading is bad news for the bond market because it indicates that the economy may be strengthening more than thought. However, a weaker reading means that the economy may not grow as much as predicted, making stocks less appealing to investors. This also eases inflation concerns in the bond market and could lead to slightly lower mortgage rates Thursday if the stock markets remain calm. It is expected to show an increase of 0.5 % in the index, indicating moderate economic growth over the next couple of months. It will take a sizable difference between forecasts and its actual reading for this report to noticeably influence mortgage rates.

July’s New Home Sales data is the final report of the week, which will be released at 10:00 AM ET Friday morning. This report will give us another indication of housing sector strength and mortgage credit demand, but only tracks a small portion of all home sales. It usually doesn’t have much of an impact on bond prices or mortgage rates unless it varies greatly from forecasts. Current forecasts are calling for a minor decline in sales of newly constructed homes from June to July. An unexpected increase in sales would hint at sector strength, making the data negative for mortgage rates.

Overall, Wednesday is likely to be the most active day for mortgage rates and Tuesday appears to be the best candidate for least important. Stocks will probably be a contributing factor to bond movement several days with no key economic data scheduled this week. Afternoon weakness in bonds Friday pushed the benchmark 10-year Treasury Note yield up to 2.83% Friday, continuing its upward trend. Unfortunately, I don’t believe we have a good chance of seeing that reverse until we get closer to 2.95%. Since mortgage rates tend to follow bond yields this is would be bad news for mortgage shoppers. Therefore, proceed cautiously if still floating an interest rate and closing in the near future.

Weekly Mortgage Commentary_August 5, 2013

This week is extremely light in terms of the number of economic reports that are scheduled for release that may influence mortgage rates. In fact, there is only one monthly report scheduled and it is not considered to be highly important to the markets. There are several Treasury auctions scheduled during the week, but only two of them are worth watching. This makes it likely that stock movement will heavily influence bond trading and mortgage rates several days.

 

June’s Trade Balance is the only monthly economic data, scheduled to be posted early Tuesday morning. It gives us the size of the U.S. trade deficit but is considered to be of low importance to the bond market and usually has little impact on mortgage rates. Analysts are expecting to see a $43.4 billion trade deficit, but it will take a wide variance to directly influence mortgage pricing.

The two important Treasury auctions will take place during the middle part of the week. The 10-year Note auction will be held Wednesday while 30-year Bonds will be sold Thursday. We often see some weakness in bonds ahead of the sales as the firms participating prepare for them. However, as long as they are met with decent demand from investors, the firms usually buy them back. This tends to help recover any presale losses. But, if the sales are met with a lackluster interest from investors- particularly international buyers, the bond market may move lower after the results are posted and mortgage rates may move higher. Those results will be announced at 1:00 PM each sale day.

Also worth noting are several speaking engagements by multiple Fed members this week. These appearances are common and many go unnoticed on a regular basis. However, with no important economic data scheduled to drive bond trading and the broader financial markets, their words will draw even more attention than usual. Especially since last Friday’s Employment report disappointed many analysts and there is now more debate about when the Fed may start tapering their current bond-buying program (QE3). Any statements related to that topic during their speeches this week will become extremely newsworthy and could easily affect mortgage rates.

Overall, it is difficult to label one particular day as the most important with so little to choose from. It will be interesting to see if Friday’s bond rally will hold in Monday’s trading. If so, we should see an improvement in rates Monday due to improvements in bonds late Friday afternoon. I never recommend straying far from your mortgage professional if still floating an interest rate, however, the markets and mortgage pricing are likely going to be a calmer the next several days than they have during recent weeks. That is unless, something unexpected happens, which is always a possibility.

Weekly Mortgage Commentary_July 15, 2013

This week brings us the release of six relevant economic reports for the bond market to digest in addition to semi-annual Congressional testimony by Fed Chairman Bernanke. Several of the economic reports are considered to be of high importance, meaning we will likely see more volatility in the financial markets and mortgage pricing over the next several days. There are also some heavily watched corporate earnings releases scheduled for the stock markets this week that can influence bond trading and therefore, mortgage pricing. In other words, we are likely in for another very active week for mortgage rates.

 

June’s Retail Sales report will be posted at 8:30 AM ET Monday morning. This data is considered to be of high importance because it measures consumer spending. Consumer spending makes up over two-thirds of the U.S. economy, so any related data is watched closely. The Commerce Department is expected to say that sales at retail level establishments rose 0.7% last month. A larger than expected increase in sales will likely cause bond selling and lead to higher mortgage rates since it would mean consumers are spending more than thought. That would point towards economic growth and makes a Fed bond-buying pullback in the very near future more likely, making bonds less attractive to investors.

Tuesday has two pieces of economic data scheduled. The first is June’s Consumer Price Index (CPI) at 8:30 AM ET, which is a mirror of last week’s PPI with the exception that Tuesday’s CPI measures inflation at the more important consumer level of the economy. Analysts have forecasted a 0.3% increase in the overall index and a 0.2% rise in the core data. The core data is considered to be the key reading because it gives us a more stable measure of inflation as it excludes more volatile food and energy prices. Higher than expected readings could raise inflation fears and push mortgage rates higher, while readings that fall short of forecasts should lead to lower rates early Tuesday.
June’s Industrial Production data is the second report of the day at 9:15 AM ET. This data measures output at U.S. factories, mines and utilities, giving us an indication of manufacturing sector strength. It is expected to show a 0.3% rise in production, indicating that the manufacturing sector strengthened slightly during the month. That would basically be bad news for bonds, however the CPI will take center stage Tuesday morning.

Wednesday morning’s only economic data is June’s Housing Starts report. This data gives us an indication of housing sector strength by tracking construction starts of new homes, but is not considered to be of high importance. Analysts are currently expecting to see a fairly large increase in new starts. However, I don’t see this data having much of an impact on mortgage rates Wednesday unless it varies greatly from forecasts with so much else scheduled that day.

Late Wednesday morning, Fed Chairman Bernanke will start his semi-annual update about the economy and monetary policy before Congress. He will speak before the House Financial Services Committee Wednesday and the Senate Banking Committee Thursday, each at 10:00am ET. His testimony will be broadcast and watched very closely. Analysts and traders will be looking for the Fed’s opinion on the status of the economy and their expectations of future growth, inflation and unemployment concerns that will lead to the Fed’s next move. Of particular interest will be the hot button topic of when the Fed will begin tapering, and the end of, their current $85 billion monthly bond buying program (QE3). These topics should create a great deal of volatility in the markets during the prepared testimony and the question and answer session that follows. If he indicates that inflation may become a point of concern or anything that hints at rapid economic growth, we can expect to see the bond market fall and mortgage rates rise Wednesday. The tapering topic has been much discussed and there has been plenty of speculation about it that has led to a great deal of volatility recently in the financial and mortgage markets. Therefore, I am fairly certain that if it is not addressed in Chairman Bernanke’s prepared statement it will come up during Q&A. And with it will probably be further volatility in the bond market and mortgage rates.

We usually see the most movement in the markets and mortgage rates during the first day of this testimony as the Chairman’s prepared words for both appearances are quite similar to each other, meaning that the second day of testimony rarely gives us anything we did not hear during the first day. The general exception is something asked or answered during the Q&A portion of the second day’s appearance.

Wednesday afternoon does bring us something that could influence the markets and possibly mortgage pricing. The Federal Reserve will release its Beige Book report at 2:00 PM ET Wednesday afternoon. This report is named simply after the color of its cover, but it is considered to be important to the Fed when determining monetary policy during their FOMC meetings. It details economic activity and conditions by region throughout the U.S. Since Fed Chairman Ben Bernanke’s testimony to Congress hours before gave us a recent update, I don’t think we will see any significant surprises in this report. If this is accurate, we will likely see little movement in mortgage rates Wednesday afternoon as a result of this report.

With exception to the second day of Fed testimony, the only thing of relevance scheduled for Thursday is June’s Leading Economic Indicators (LEI) at 10:00 AM. This Conference Board index attempts to measure economic activity over the next three to six months. While it is not a factual report, it still is considered to be of moderate importance to the bond market. It is expected to show a 0.3% increase, meaning it is predicting minor economic growth over the next few months. A large decline in the index would be good news for the bond and mortgage markets.

Overall, look for the early part of the week to be more active than the latter. The single most important day is probably Wednesday due to Chairman Bernanke’s testimony, but Monday and Tuesday’s economic data is highly important to the bond market and mortgage rates. I would be surprised if we didn’t see noticeable movement in rates each of the first three days of the week. Accordingly, please maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.

Weekly Mortgage Commentary_July 1, 2013

This week brings us the release of only four pieces of relevant economic data that may influence mortgage rates, but two of them are considered to be highly important. In addition, the Independence Day holiday falls in the middle of the week again this year, so we also have an early and full-day closure to work around.                                                                                                       

Unlike many Mondays, this week’s does bring us some very important economic data. The Institute of Supply Management (ISM) will post their manufacturing index for June late Monday morning. This index measures manufacturer sentiment by surveying trade executives on current business conditions. May’s reading that was posted last month surprised many when it came in at 49.0. A reading below 50 means that more surveyed executives felt business worsened during the month than those who felt it had improved. Analysts are expecting a reading of 50.5, indicating slight improvement in manufacturer sentiment. Good news for the bond market and mortgage rates would be another decline in the index, signaling worsening conditions in the manufacturing sector.

The Commerce Department will post May’s Factory Orders data late Tuesday morning, which is similar to the Durable Goods Orders report that was released last week. The biggest difference is that this week’s report covers both durable and non-durable goods. It usually doesn’t have as much of an impact on the bond market as the durable goods data does, but can lead to changes in mortgage pricing if it varies greatly from forecasts. Current expectations are showing a 2.0% increase in new orders from April’s levels, pointing towards sector strength. A decline in orders would be considered good news for the bond market and could help lower mortgage rates slightly Tuesday.

May’s Goods and Services Trade Balance will be released at 8:30 AM ET Wednesday. It is the week’s least important data and probably will not influence mortgage rates. It measures the size of the U.S. trade deficit and is expected to show a $40.8 billion deficit. This data usually does not directly affect mortgage rates, but it does influence the value of the U.S. dollar versus other currencies. A stronger dollar makes U.S. securities more attractive to international investors because they are worth more when sold and converted to the investor’s domestic currency. But unless we see a significant variance from forecasts, I don’t believe this data will lead to a change in mortgage rates Wednesday.

The U.S. financial and mortgage markets will be closed Thursday in observance of the Independence Day holiday. They will also close early Wednesday afternoon ahead of the holiday and will reopen Friday morning for regular trading hours. We could see bond traders sell some holdings before the 2:00 PM ET close to protect themselves over the holiday, which raises the possibility of seeing an upward revision to mortgage rates Wednesday afternoon.

The last data of the week is arguably the single most important report we see each month. The Labor Department will post June’s unemployment rate, number of new payrolls added or lost and average hourly earnings early Friday morning. These are considered to be very important readings of the employment sector and can have a huge impact on the financial markets. The ideal scenario for the bond market is rising unemployment, a large decline in payrolls and no change in earnings. Weaker than expected readings would raise concerns about economic growth and likely help boost bond prices and lower mortgage rates Friday. However, stronger than expected readings could be extremely detrimental to mortgage pricing as it would help support the theory that we will see good economic growth later this year. Analysts are expecting to see the unemployment rate remain at 7.6%, with 165,000 jobs added and a 0.2% rise in earnings.

Overall, I am expecting to see another fairly active week for the financial markets and mortgage rates. We have a small improvement in rates waiting for us Monday morning due to strength in bonds late Friday. The most important day of the week is Friday, but Monday could also be a key day in determining whether rates move higher or lower on the week. With two of the week’s three full-length trading days having key economic data scheduled for release, I strongly recommend maintaining contact with your mortgage professional if still floating an interest rate.

This week's Mortgage Commenatary_June 24, 2013

This week brings us the release of six economic reports for the markets to digest in addition to two Treasury auctions that have the potential to come into play. Unfortunately, even weaker than expected economic news may not be able to derail this downward spiral in bonds and upward spike in mortgage rates. It appears that the markets are looking forward and basing their trading on future events, not past. With the benchmark 10-year Treasury Note yield closing above 2.50% Friday, this upward move in rates may continue until it gets much closer to 3.00%. Hopefully this will change, but until we get some stability in the bond market, we should progress with extreme caution.

 

May’s Durable Goods Orders will kick off this week’s data early Tuesday morning, giving us an indication of manufacturing sector strength. It tracks orders at U.S. factories for big-ticket items, or products that are expected to last three or more years such as electronics and appliances. This data is known to be quite volatile from month to month and is expected to show an increase of 3.0% in new orders from April to May. A large decline would be the ideal scenario for the bond market and would hopefully lead to a decline in mortgage pricing as it would indicate manufacturing sector weakness.

 

Tuesday also has May’s New Home Sales report, but during late morning trading. It helps us measure housing sector strength by tracking sales of newly constructed homes. This report is similar to last week’s Existing Home Sales report, but covers a much smaller portion of sales than last week’s report did. It is expected to show a small increase in sales, but will likely not have much of an impact on mortgage rates because this data gives such a small snapshot of the housing sector. I believe it will take a large rise in sales or a sizable decline for this data to influence mortgage rates.

 

June’s Consumer Confidence Index (CCI) is the third report of the day. It will also be posted at 10:00 AM ET Tuesday and is important to the financial markets because it measures consumer willingness to spend. If consumers are more confident about their own financial situations, they are more apt to make large purchases in the near future. If it shows a sizable increase in confidence from last month, we can expect to see the bond market falter and mortgage rates rise slightly. Current forecasts are calling for a reading of 74.9, down from last month’s 76.2 reading. The lower the reading, the better the news it is for bonds and mortgage rates.

 

Wednesday’s only economic data is the final reading to the 1st Quarter Gross Domestic Product (GDP). The GDP is the sum of all products and services produced in the U.S. and is considered to be the best measurement of economic growth or contraction. However, this particular data is quite aged now (covers January through March) and will likely have little impact on the bond market or mortgage pricing unless it varies greatly from previous readings. Market participants are looking more towards next month’s release of this quarter’s initial GDP reading. Last month’s first revision showed a 2.4% rise in the GDP, which is what analysts are expecting to see again. An increase would be considered negative for rates as it means stronger economic activity.

 

May’s Personal Income and Outlays data is scheduled for release Thursday at 8:30 AM ET. This report gives us an indication of consumer ability to spend and current spending activity. They are important because consumer spending makes up over two-thirds of the U.S. economy. If consumer income is rising, they have more money to spend each month. Analysts are expecting to see an increase of 0.2% in income and a 0.4% rise in the spending portion of the report. Declines in both of these readings would be good news for the bond market and mortgage rates.

 

The University of Michigan will close out this week’s data when they update their Index of Consumer Sentiment for May late Friday morning. This index gives us a measurement of consumer willingness to spend. As with Tuesday’s CCI, if consumers are more comfortable with their own financial situations, they are more apt to make large purchases in the near future. Since consumer spending makes up over two-thirds of the U.S. economy, any related data has the potential to affect bond trading and mortgage rates. A downward revision would be considered good news for bonds and rates, but forecasts are calling for little change from this month’s preliminary reading of 82.7.

 

Also worth noting is the fact that the Fed will be selling more debt this week. These sales may influence broader bond trading enough to affect mortgage rates if they show strong or weak investor demand. There are sales every day except Friday but the two most likely to affect rates are Wednesday’s 5-year Note sale and Thursday’s 7-year Note auction. If they are met with a strong demand, we could see bond prices rise during afternoon trading. This could lead to afternoon improvements to mortgage rates also. But, if the sales draw a lackluster interest from investors, mortgage rates may move higher during afternoon trading those days.

 

Overall, it is difficult to label one particular day as the most important of the week. None of the data on the agenda is considered to be highly important, but Tuesday has two of the more important reports of the week. It will be interesting to see if Friday’s late sell-off extends right into Monday’s trading. If it does, it could be another difficult day for mortgage shoppers. Until the dust settles and logic returns to the market, we will be taking things day by day. And if still floating an interest rate, I strongly recommend being extremely careful and maintain contact with your mortgage professional.

This Week's Mortgage Commenatry_June 10, 2013

This week has four pieces of economic data that are relevant to mortgage rates in addition to two Treasury auctions that can also be influential. None of the relevant data is schedule until Thursday, so look for the stock markets to influence bond trading and mortgage rates the first couple of days. We are going into the week with an increase in rates due to weakness in bonds late Friday. If your lender did not revise rates higher Friday afternoon, you have an increase waiting when the markets open Monday morning.

 

The two relevant Treasury auctions will be held Wednesday and Thursday. 10-year Treasury Notes will be sold Wednesday while 30-year Bonds will be sold Thursday. Results of both auctions will be posted at 1:00 PM ET on the sale days. If investor demand was high, we may see bonds rally during afternoon trading, however, weak demand for the securities could lead to selling and an increase to mortgage rates. It is common to see some pressure in bonds right before these sales as investors prepare for them, but as long as the sales are not weak those pre-auction losses are usually recovered once they are completed.

The first data of the week comes Thursday when the Commerce Department posts May’s Retail Sales data at 8:30 AM ET. This report gives us a very important measurement of consumer spending, which is highly relevant to the bond market because consumer spending makes up over two-thirds of the U.S. economy. Analysts are expecting to see that retail-level sales rose 0.3% last month. A decline in sales, signaling a slowing economy, would be negative for stocks, good news for the bond market and could lead to lower mortgage rates Thursday morning. On the other hand, a stronger level of sales will likely equate to an increase in rates.

Friday has the remaining three pieces of economic data that we will be watching. The first of those is one of the two key measurements of inflation that we get each month. May’s Producer Price Index (PPI) will be released early Friday morning, helping us measure inflationary pressures at the producer level of the economy. There are two readings of this index, the overall and the core data. The core data is considered to be the more important one because it excludes more volatile food and energy prices. A large increase could raise concerns about inflation rising as soon as the economy gains some traction. This would not be good news for bond prices or mortgage rates since inflation erodes the value of a bond’s future fixed interest payments. Rising inflation causes investors to sell bonds, driving bond prices lower, pushing their yields upward and bringing mortgage rates higher. Analysts are expecting to see increases of 0.1% in both readings, signaling inflation was subdued at the manufacturing level of the economy last month.

May’s Industrial Production data will be released at 9:15 AM ET Friday and is considered to be moderately important. It measures output at U.S. factories, mines and utilities, giving us a fairly important measurement of manufacturing sector strength. If it reveals that production is rapidly rising, concerns of manufacturing strength may come into play in the bond market. A larger increase than the expected 0.1% would indicate the manufacturing sector is stronger than thought and would likely push mortgage rates slightly higher.

June’s preliminary reading to the University of Michigan’s Index of Consumer Sentiment will be posted late Friday morning. This index measures consumer willingness to spend and usually has a moderate impact on the financial markets. It is expected to show a reading of 83.0, which would be a decline from May’s 84.5. A smaller than expected reading would be considered good news for bonds because it would mean that surveyed consumers were less optimistic about their own financial situations than thought. That often means they are less likely to make large purchases in the near future, but since this report is only moderately important it likely will not influence mortgage rates considerably unless it shows a significant variance from forecasts.

Overall, look for Thursday or Friday to be the biggest day of the week with both having important economic data scheduled. The least important day of the week will probably be Tuesday. We saw plenty of movement in the markets and mortgage pricing again last week and it is quite likely that this week will also be active. However, I suspect that it will be to a less degree than last week was. The stock markets will also influence bond trading and mortgage rates, so watch the major indexes in addition to the economic reports. It is highly recommended that you maintain contact with your mortgage professional this week if still floating an interest rate.