I’m going to go out on a limb and say that Thursday’s news will have much more impact on the mortgage market than the Fed Announcement today (Wednesday).
Here’s why:
- There are 6, yes SIX reports coming out on Thursday.
- The Fed discusses lagging indicators in their meetings (old reports, old information).
- Mortgage rates aren’t based on the fed funds rate.
- Inflation is the key concern with mortgage rates.
I really could rant on more.. but let’s be honest – What matters to traders is what’s happening now. They do a lot of predicting the market, and they use the most current information available to make those moves.
In regards to inflation, the Fed’s announcement said:
“The Committee expects inflation to moderate in coming quarters“
If the Personal Consumption Expenditures (PCE) comes out hot tomorrow morning at 8:30am ET, we’ll have more evidence that inflation is running outside of our comfort level and traders will run react.
Here’s the list of news we get to digest tomorrow (in case you missed it on Monday):
- Personal Spending Report – This is the largest component of Gross Domestic Product. It represents the change in the market value of all the goods and services that are purchased by consumers.
- Core CPE – This measures the price changes in consumer goods and services. The cool thing (yea, I said cool) is that this leaves out food and energy costs from the figures. By excluding those two variables, it does a much more effective job of measuring inflation. More people than just me know that, and that is why it’s a very big deal. MOST IMPORTANTLY – not only is this weeks report for the month of March, but it’s also the year on year report. Buckle up.
- Initial Jobless Claims – this is the number of people that are filing their first claims for unemployment insurance. It can indicate which direction the economy is headed with job growth. Since it can be so volatile week to week, analysts tend to look at moving averages on this information.
- ISM Index – It’s a national manufacturing index that’s based on a survey of 300 industrial companies. It’s considered the ‘king’ of manufacturing indicators. It moves a lot of money in and out of the stock market, which can impact bonds quickly.
- Personal Income – Simply put, it’s a look at total earnings.
So, this is why I think Thursday will have more impact on the MORTGAGE market than Wednesday did. Sure, the Fed Statement will play a part in where things go, but ultimately – the news reel keeps on a goin’.
If you want to stay in touch with what the mortgage market is doing, follow me. I’ll keep you informed!
