A Look ahead at events that can effect Mortgage bond prices

Economic
Indicator
Release
Date & Time
Consensus
Estimate

Analysis
Existing Home Sales Monday, Oct. 25,
10:00 am, et
4.23m Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.
Consumer Confidence Tuesday, Oct. 26,
10:00 am, et
50 Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
2-year Treasury Note Auction Tuesday, Oct. 26,
1:15 pm, et
None Important. $35 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Durable Goods Orders Wednesday, Oct. 27,
8:30 am, et
Up 0.8% Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates.
New Home Sales Wednesday, Oct. 27,
10:00 am, et
300k Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
5-year Treasury Note Auction Wednesday, Oct. 27,
1:15 pm, et
None Important. $35 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Q3 Advanced GDP Thursday, Oct. 28,
8:30 am, et
Up 2.4% Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.
7-year Treasury Note Auction Thursday, Oct. 28,
1:15 pm, et
None Important. $29 billion of notes will be auctioned. Strong demand may lead to lower mortgage rates.
Q3 Employment Cost Index Friday, Oct. 29,
8:30 am, et
Up 0.5% Very important. A measure of wage inflation. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment Friday, Oct. 29,
10:00 am, et
68.5 Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

Employment Cost Index

The employment cost index is a quarterly report issued by the Department of Labor. The report measures the growth of wages, salaries, and benefits costs over a certain period of time. Though ECI figures are usually weeks old, the data remains the best indicator of employment price pressures considering it factors employees’ total compensation.

If wage pressures become evident, higher expectations of inflation also tend to arise. However, increasing compensation does not necessarily lead to increased inflationary pressures. Oftentimes, increased productivity enables employers to increase compensation without increasing the costs of their goods or services. Be cautious heading into this release. 


 

 

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