Updated on February 27, 2017 10:19:04 AM EST
Today’s sole relevant economic report was Januarys Durable Goods Orders at 8:30 AM ET. It showed a 1.8% decline in new orders for big-ticket products such as appliances and airplanes, matching forecasts. However, a secondary reading the excludes more costly and volatile airplane orders showed a 0.2% decline when analysts were expecting to see a 0.5% increase. This means that the manufacturing sector was weaker than expected if transportation-related orders are excluded. Therefore, we can consider the data slightly positive for bonds and mortgage rates.
Tomorrow has two of this week’s five remaining monthly and quarterly releases. The first is the revised 4th Quarter GDP reading at 8:30 AM ET. The GDP is considered the benchmark reading of economic growth or contraction because it is the total sum of all goods and services produced in the U.S. Analysts forecasts currently call for an annual rate of growth of 2.1%, up from the initial estimate of 1.9% that was posted last month. It will be interesting to see where this figure falls and what its impact on the markets will be. Generally speaking, higher levels of activity are bad news for the bond market, while a larger downward revision would be good news for bonds and could lead to improvements in mortgage pricing.
Februarys Consumer Confidence Index (CCI) will be posted at 10:00 AM ET tomorrow. This Conference Board index measures consumer confidence in their personal financial situations, giving us a measurement of consumer willingness to spend. If consumers are feeling good about their own financial and employment situations, they are more apt to make large purchases in the near future. Since consumer spending makes up over two-thirds of the economy, related data is considered important in terms of gauging economic growth. It is expected to show a decline in confidence from the 111.8 reading in January to 111.5 this month. A lower reading would be considered good news for bonds and mortgage rates since it would indicate consumers are less likely to make a large purchase in the near future than many had thought.
Overall, Wednesday is the best candidate for most important day of the week with two important reports scheduled in the morning and the afternoon release of the Fed Beige Book that can affect the Fed’s voting on interest rate changes. The calmest day will likely be Thursday. Due to the importance of some of this week’s data, it is strongly recommended that you maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.
©Mortgage Commentary 2017