This Week's Market Commentary

This week brings us the release of only three monthly economic reports that are likely to influence mortgage rates in addition to the minutes from the most recent FOMC meeting. However, two of those three releases are extremely important to the financial and mortgage markets and can cause significant movement in mortgage rates if they show surprises. It appears we will have a couple of days with noticeable changes in rates and a couple with little or no change.

Monday has the Institute for Supply Management (ISM) posting their manufacturing index for September at 10:00 AM ET. This index measures manufacturer sentiment and it can be heavily influential on the markets and mortgage rates. Analysts are expecting to see little change from August's 49.6 reading, meaning surveyed manufacturers felt business conditions were steady from the previous month. The 50.0 benchmark is extremely important because a reading below that level means more surveyed executives felt business worsened in the month than those who said it had improved. This data is important not only because it measures manufacturer sentiment, but it is also very recent data. Some economic releases track data that are 30-60 days old, but the ISM index is only a few weeks old, usually the first report we see each month. If it reveals a reading below 49.6, meaning sentiment fell short of expectations, we should see the bond market move higher and mortgage rates fall tomorrow.

Tuesday and Wednesday have nothing of concern scheduled for release. Look for the stock markets to drive bond trading and mortgage rates. Stock strength will likely pressure bonds and lead to an increase in mortgage rates, while stock selling should draw funds into bonds and help lower mortgage pricing.

Thursday's monthly economic data will come from the Commerce Department, who will post August's Factory Orders data at 10:00 AM ET. This manufacturing sector report is similar to last week's Durable Goods Orders release, but also includes orders for non-durable goods. It can impact the bond market enough to change mortgage rates if it varies from forecasts by a wide margin. Analysts are forecasting a decline of 6.0% in new orders, meaning manufacturing activity slowed considerably in August. This would be good news for the bond market and mortgage pricing, but I believe we will need to see a much larger decline for this report to create a noticeable improvement in rates.

Later Thursday is the release of the minutes from the last FOMC meeting. These may be a major mover of the markets or could be a non-factor, depending on what they say. The key will be concerns over the economy, inflation and the Fed's next move. If Fed members were concerned about the economy slipping into another recession, we may see the bond market move higher and mortgage rates lower Thursday afternoon. It will be interesting to see how much debate and disagreement amongst members took place during the meeting. However, since we already know about the QE3 program that was announced last month, I don’t believe we will see mortgage rates show much reaction to these minutes. They will be posted at 2:00 PM ET, so any reaction will come during afternoon trading.

Also worth noting is some news from overseas before the markets open Thursday. The Bank of England’s monetary policy announcement (equivalent to our FOMC) will be released at 7:15 AM ET while the European Central Bank will announce at 7:45 AM ET. The ECB will draw the most attention as global investors are extremely concerned about the Eurozone and what actions will be taken to shore up some of its’ member’s finances. We don’t normally address these events but recent announcements have drawn a lot of attention here, so we should be on the alert for a reaction in the bond and mortgage markets.

The Labor Department will post September's Employment report early Friday morning. This report will reveal the U.S. unemployment rate, number of new payrolls added or lost during the month and average hourly earnings. 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, falling payrolls and a drop in earnings.

If this report gives us weaker than expected readings, bond prices should move higher and we should see lower mortgage rates Friday. However, stronger than forecasted readings could cause a sizable spike in mortgage pricing and start an upward trend in rates. Analysts are expecting to see the unemployment rate remain at 8.1%, an increase of 120,000 new jobs from August's level and a 0.2% increase in earnings.

Overall, I suspect we will see a fair amount of volatility in the markets and mortgage rates this week, but the busiest days will probably be early and late in the week. There isn't that much data being released, but what is being posted is extremely important to the markets and highly influential on mortgage pricing. Labeling tomorrow and Friday as the most important days is easy due to the importance of the economic reports scheduled those days. The calmest days for mortgage rates will likely be Tuesday or Wednesday but major moves in the stock markets either day could lead to movement in mortgage rates. Even though there are only a couple of relevant economic reports being posted this week, it would still be prudent to maintain fairly constant contact with your mortgage professional this week if still floating an interest rate. 

Fall Maintenance from Top to Bottom

Now that we’ve passed the Autumnal Equinox, it’s time to start thinking about preparing you home for the winter. We’re going to post a four part series focusing on:

1. Cleaning your gutters and checking the foundation
2. Storing your outdoor furniture and bbq
3. Preparing your plants and sprinklers
4. Keeping your heating happy and running strong all winter long

Clean your gutters

You might think you should wait to clean your gutters until after all of the leaves have fallen. However, you’re better off cleaning them a few times during the autumn season to prevent major blockages in the downspouts, as well as ensuring that there is no damage to the gutters caused by falling branches.

You should be able to use a good ladder for single story, but you’ll need a really tall ladder and a good friend to spot you if you’re going up higher than that. When you’re up on the roof, look for loose shingles, and look for cracks in the masonry around your fireplace.

As you’re cleaning, look for cracks and rust in the gutters that should be repaired or even replaced.

Finally use a hose to clear debris from the downspouts. To make maintenance faster and easier, consider investing in leaf guards for your gutters to reduce the leaves that get stuck.

Lowe’s has a wonderful article here with graphics to show you where to look for rust points. Their advice for cleaning gutters is:
You may encounter stubborn, caked buildups. If so, they may be more easily removed a little while after a rain when they are damp instead of dry and hard. Of course, you can always create your own rain with a water hose, but resist the urge to clean your gutters with water pressure. It seems like it would be so easy, but you might pack debris tightly into the downspouts, and dirty water might splash all over your house.

Inspect your gutters as you clean. Look for corrosion, holes, leaking joints or loose, missing or bent hangers. Mark problem areas with masking tape so you can find the problem spots quickly when you are ready to do the repairs.

Wear gloves to protect yourself from scratches, and have handy a garden trowel or gutter scoop, a whisk broom and a rag. Put your tools in a bucket with a handle. The bucket should be fastened to your ladder with a wire hook. This will prevent you from having to juggle a lot of tools while climbing or descending the ladder. It will also remove the temptation of stuffing tools into your pockets – a hazard if you should happen to fall.

It is a good idea to flush your gutters with a garden hose after you have cleaned them. This will show how well the gutters are draining and will indicate any areas that are holding standing water, which contributes to many gutter problems.

The article further discusses what to use to repair your gutters and prevent damage from leaves and branches.

Check Foundations

Take some time on a clear, sunny day to walk around your home looking carefully around the edges.

. Rake away all debris and edible vegetation from the foundation.
. Seal up entry points to keep small animals from crawling under the house.
. Tuckpoint or seal foundation cracks. Mice can slip through space as thin as a dime.
. Inspect sill plates for dry rot or pest infestation.
. Secure crawlspace entrances.

Steel wool is highly recommended for plugging up holes against rats
and mice

You’ve paid a lot of money for your home, and doing the right things at the right time will protect that investment for years to come.

This Week's Market Commentary

This week brings us the release of six relevant economic reports for the bond market to digest in addition to two potentially influential Treasury auctions. Most of the reports are considered to be of moderate to fairly high importance to the markets, so they do have the potential to affect mortgage rates. We also have to consider stock market swings as they also can have a direct impact on bond trading and mortgage pricing, as we have seen over the past few weeks. Generally speaking, stock market strength makes bonds less appealing to investors and leads to higher mortgage pricing. On the other hand, stock weakness often leads to safe-haven investing where investors move funds away from stocks and into bonds to escape the volatility. That translates into higher bond prices and lower mortgage rates.

The first release of the week is September's Consumer Confidence Index (CCI) late Tuesday morning. This Conference Board index will be posted at 10:00 AM ET and gives us a measurement of consumer willingness to spend. It is expected to show an increase in confidence from last month's reading, indicating that consumers were more optimistic about their own financial situations than last month, therefore, more likely to make a large purchase in the near future. This is bad news for the bond market and mortgage rates because consumer spending fuels economic growth. Analysts are calling for a reading of approximately 63.0, up from August's 60.6 reading. The smaller the reading, the better the news for the bond market and mortgage rates.

August's New Home Sales will be released late Wednesday morning. The Commerce Department is expected to say that sales of newly constructed homes rose last month, indicating housing sector strength. This report will likely not have a noticeable impact on mortgage rates unless its readings differ greatly from forecasts. This is the week's least important report in terms of potential impact on mortgage rates, partly because it covers the small portion of all homes sales that last week’s Existing Home Sales report did not.

The Treasury will sell 5-year Notes Wednesday and 7-year Notes Thursday, which will tell us if there is an appetite for medium-term securities. If investor demand in these sales is strong, particularly from international buyers, the broader bond market should move higher, pushing mortgage rates lower. But a lackluster interest from investors could lead to bond selling and higher mortgage pricing. The results of the sales will be announced at 1:00 PM ET each day, so any reaction to the results will come during afternoon trading Wednesday and Thursday. Recent sales in these securities have not shown high levels of investor interest, so I do not have high expectations for this week’s auctions.

August's Durable Goods Orders is the week's most important data and will be posted early Thursday morning. This report gives us an indication of manufacturing sector strength by tracking orders for big-ticket items at U.S. factories. Big-ticket products are items that are expected to last three or more years. Analysts are expecting to see a sizable drop of 5.1% in new orders, indicating softening conditions in the manufacturing sector. That could help boost bond prices and cause mortgage rates to drop Thursday because signs of economic weakness make longer-term securities more appealing to investors. However, a sizable increase would indicate a stronger than expected manufacturing sector and would likely help push mortgage rates higher. It is worth noting that this data is known to be quite volatile from month-to-month, so a slight or moderate change may not affect mortgage pricing.

Also Thursday morning is the final revision to the 2nd Quarter Gross Domestic Product (GDP). Since this data is aged now and the preliminary reading of the 3rd Quarter GDP will be released next month, I don't see this revision having much of an impact on the financial markets or mortgage pricing. The GDP is important because it is the total sum of all goods and services produced within the U.S. and is considered the best measurement of economic activity. It is expected to show no change from the previous estimate of a 1.7% increase in the GDP. It will take a fairly large revision for this data to move mortgage rates Thursday.

Friday has two reports scheduled that may influence mortgage rates. The first is August's Personal Income and Outlays early Friday morning. It gives us an indication of consumer ability to spend and current spending habits. This is relevant to the markets because consumer spending makes up over two-thirds of the U.S. economy. Rising income generally indicates that consumers have more money to spend, making economic growth more of a possibility. This is negative news for the bond market and mortgage rates because it raises inflation and economic growth concerns, making long-term securities such as mortgage-related bonds less attractive to investors. It is expected to show an increase of 0.2% in income and a 0.5% increase in spending. If we see weaker than expected readings, the bond market should react positively, leading to lower rates Friday.

The second report is the University of Michigan's revised Index of Consumer Sentiment for September. The preliminary reading that was released earlier this month showed a 79.2 reading. Analysts are expecting to see a small downward revision, meaning consumer confidence was slightly weaker than previously thought. As with Tuesday's CCI release, a lower than expected reading would be good news for bonds and should help improve mortgage rates.

Overall, it is likely going to be a fairly active week in the markets and mortgage rates again. The most important day will likely be Tuesday or Thursday, but Friday's data can also influence mortgage rates. The best candidate for the calmest day of the week appears to be Monday with no relevant data being released and an improvement in mortgage rates waiting for borrowers due to strength late Friday. I am still looking for stocks to move lower before they move much higher, which would push investor funds into bonds and drive mortgage rates lower. Therefore, I remain optimistic towards mortgage rates, both short and long-term, but still recommend maintaining fairly regular contact with your mortgage professional if still floating an interest rate. 

This Week's Market Commentary

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.

This Week's Market Commentary

This week brings us the release of six relevant economic reports that may influence mortgage rates in addition to two Treasury auctions and an afternoon of FOMC events. Several of the economic reports and the FOMC stuff are all considered to be highly important to the financial and mortgage markets, meaning that we may see significant changes to rates this week. There is a very good chance of seeing noticeable changes in rates several days. There is no relevant news scheduled to be posted tomorrow, so look for the stock markets to be the biggest force behind bond trading and changes to mortgage pricing until we get to the middle part of the week.

The week's first event is July's Goods and Services Trade Balance data early Tuesday morning, giving us the size of the U.S. trade deficit. It is expected to show a deficit of approximately $44.0 billion, which would be an increase from June's $42.9 billion. However, I would consider this the least important of this week's events, meaning it will likely have little impact on bond trading or mortgage rates unless it varies greatly from forecasts.

There are two Treasury auctions this week that have the potential to influence mortgage rates. The first is Wednesday’s 10-year Treasury Note auction, which will be followed by a 30-year Bond auction Thursday. It is fairly common to see some weakness in bonds before these sales as investors prepare for them. If the sales are met with a decent demand from investors, indicating that interest in longer-term securities such as mortgage-related bonds still exists, the earlier losses are usually recovered after the results are announced. The results of Wednesday’s sale will be posted at 1:00 PM ET while Thursday’s results are set for 11:30 AM ET due to other events scheduled that day. If demand was strong, particularly from international investors, we should see mortgage rates improve during afternoon trading Wednesday. However, due to the magnitude of Thursday’s Fed events, that day’s auction will likely have little impact on the bond market and mortgage rates.

One of the week's two important inflation readings is the only economic report scheduled for release Thursday morning. The Labor Department will post August's Producer Price Index (PPI) at 8:30 AM ET, giving us an important measurement of inflationary pressures at the producer level of the economy. There are two readings that analysts follow in this release. They are the overall index and the core data reading. The core data is the more important of the two since it excludes more volatile food and energy prices. Analysts are predicting a 1.2% increase in the overall index, and a rise of 0.2% in the core data. Stronger than expected readings could fuel inflation concerns in the bond market. That would be bad news for bonds and mortgage rates because inflation is the number one nemesis of the bond market as it erodes the value of a bond's future fixed interest payments. As inflation becomes more of a concern in the markets, bonds become less appealing to investors, leading to falling prices and higher mortgage rates.

Thursday’s Fed events start with the 12:30 PM adjournment of the FOMC meeting that began Wednesday. It is widely expected that Mr. Bernanke and company will not change key short-term interest rates at this meeting, but there is a great deal of hope in the market that we are getting closer to another move by the Fed such as QE3. Friday’s Employment numbers helped bolster the calls for Fed action. I believe that an announcement of a bond buying program should rally not only stocks but also bonds and mortgage rates because those are the securities that the Fed will purchase in the QE program. On the other hand, the lack of at least a strong indication that QE3 is coming soon will probably lead to selling in the markets and an upward revision to mortgage rates.

Also worth noting is that the FOMC meeting is ending earlier than the traditional 2:15 PM because it is one of the meetings that will be followed by a press conference with Fed Chairman Bernanke. The meeting will adjourn at 12:30 PM while the press conference will begin at 2:15 PM and will probably lead to afternoon volatility in the markets and mortgage rates Thursday. The Fed will also update their economic and monetary policy projections right before the press conference begins. They are expected to be posted at 2:00 PM ET. Any significant revisions to the Fed’s outlook on unemployment, GDP growth or their timetable for keeping key rates at current levels will also cause volatility in the markets and mortgage rates.

Friday has the remaining four pieces of economic data with two of them considered to be major releases. Those highly important reports are August's Retail Sales and Consumer Price Index (CPI) will both be posted at 8:30 AM. The sales report will give us a very important measurement of consumer spending, which is extremely relevant to the markets because it makes up over two-thirds of the U.S. economy. Current forecasts are calling for a 0.7% increase in sales. Analysts are also calling for a 0.8% rise in sales if more volatile auto transactions are excluded. Larger than expected increases would be considered bad news for bonds and likely lead to an increase in mortgage pricing since it would indicate economic growth.

The Consumer Price Index (CPI) is also one of the most important reports we see each month. It is considered to be a key indicator of inflation at the consumer level of the economy. As with its' sister PPI report, there are two readings in the report- the overall index and the core data reading. Current forecasts show a 0.6% increase in the overall reading and a 0.2% rise in the core data reading. As with the PPI, a larger increase in the core data would signal rising inflation and would likely lead to higher mortgage rates Friday morning.

August's Industrial Production data will be posted mid-morning Friday. This report gives us a measurement of manufacturing sector strength by tracking output at U.S. factories, mines and utilities. It is considered to be moderately important but could help change mortgage rates if there is a significant difference between forecasts and the actual reading. Analysts are expecting to see a 0.2% decline from July's level of output. A sizable increase could lead to slightly higher mortgage rates, while a weaker than expected figure would indicate a softer than thought manufacturing sector and would be considered good news for bonds and mortgage rates. However, the CPI and Retail Sales reports are the key data of the day and will likely influence mortgage pricing much more than the production report will.

The last release of the week will be posted by the University of Michigan late Friday morning. Their Index of Consumer Sentiment will give us an indication of consumer confidence, which hints at consumers' willingness to spend. If consumer confidence in their own financial situation is rising is rising, they are more apt to make large purchases. But, if they are growing more concerned about their job security or finances, they probably will delay making that large purchase. This influences future consumer spending data and can impact the financial markets. It is expected to show a reading of 73.3, which would mean confidence slipped from August's level of 74.3. That would be considered favorable news for bonds and mortgage rates because waning consumer spending indicates slower economic growth.

Overall, I think we need to label Thursday as the most important day of the week with the PPI and Fed events scheduled. However, Friday has some very important economic data set for release and also has the potential to heavily influence bond trading and mortgage rates. Monday will probably end up being the calmest day for mortgage rates, but we still may see minor changes if the stock markets show much movement. I strongly recommend maintaining contact with your mortgage professional if still floating an interest rate, especially the latter part of the week. 

This Week's Market Commentary

This week brings us the release of only three pieces of economic data, but two of them are considered to be highly important. In addition to the economic releases, there are some overseas central bank announcements this week that could significantly affect the financial markets and mortgage rates. The financial and mortgage markets were closed Monday in observance of the Labor Day holiday, meaning we will not see new mortgage rates until this morning.  

The first release of the week will come from the Institute for Supply Management (ISM), who will post their manufacturing index at 10:00 AM ET today. This index measures manufacturer sentiment and is expected to show a reading of 50.0, which would be a slight increase from last month's reading of 49.8. A reading below 50 is considered a recessionary sign because it means that more surveyed manufacturers felt business worsened during the month than those who felt it had improved. A decline in the index would likely cause selling in the stock markets and lead to an improvement in mortgage rates.

Wednesday’s only relevant data is the revised 2nd Quarter Productivity numbers, which measures employee productivity in the workplace. Strong levels of productivity allow the economy to expand without inflation concerns. It is expected to show a small upward change from the previous estimate of a 1.6% increase. Forecasts are currently calling for a 0.2% upward revision, meaning productivity was slightly better than previously thought. This would technically be good news for the bond market and mortgage rates, but this data is considered to be only moderately important to the markets. Therefore, it will take a sizable variance from forecasts for this report to affect mortgage rates. Favorable news would be a sizable increase in productivity.

There are a couple of relatively minor private sector employment-related reports due out Thursday morning, but the biggest influence on the markets and mortgage rates will probably come from overseas before the markets open here. The Bank of England’s monetary policy announcement (equivalent to our FOMC) will be released at 7:15 AM ET while the European Central Bank will announce at 7:45 AM ET. The ECB will draw the most attention as global investors are extremely concerned about the Eurozone and what actions will be taken to shore up some of its’ member’s finances. A significant move by them will likely be taken as good news for the stock markets and could hurt bond prices here. On the other hand, if their move disappoints, we could see global stocks go into selling mode, possibly leading to funds being moved into U.S. debt for safety. That shift of funds should drive mortgage rates lower Thursday. Regardless, it will be an interesting and most likely an active morning in the markets and mortgage rates Thursday despite the release of any key economic data.

The biggest news of the week comes Friday morning. The Labor Department will post the unemployment rate, number of new jobs added or lost and average hourly earnings for August early Friday morning. The ideal scenario for the bond market and mortgage rates is rising unemployment, a drop in payrolls and earnings to fall slightly. Analysts are expecting to see that the unemployment rate remained at 8.3% and that 130,000 jobs were added during the month. Weaker than expected readings would signal further employment sector weakness and would be very good news for bonds and mortgage rates Friday. However, if we get noticeably stronger than expected numbers, mortgage rates will probably spike higher Friday.

Overall, even though the calendar is light in terms of the number of economic reports scheduled this week, two of them are major releases and can be highly influential on the financial and mortgage markets. The biggest day will likely be Friday with the Employment report being posted, but Tuesday’s ISM and Thursday’s foreign central bank announcements may also be significant factors in mortgage rates moving higher or lower on the week. That leaves Wednesday as the calmest day, but we could see traders adjust holdings and trim positions that day to prepare for Thursday’s and Friday’s events. Accordingly, I recommend maintaining contact with your mortgage professional this week if still floating an interest rate.