Market Comment for Week of February 1st
MARKET COMMENT Mortgage bond prices fell last week pushing mortgage interest rates slightly higher. Most of the data early in the week was bond-friendly. Unfortunately the Fed’s reminder that their purchases of mortgage bonds would cease after the first quarter sent bond prices tumbling Wednesday afternoon. This was followed by stronger than expected gross domestic product, employment cost index, and PCE price data Friday morning. Bonds were helped Friday afternoon as stocks remained jittery. Interest rates rose by about 1/8 of a discount point for the week.
The employment report Friday will be the most important event this week. Income, outlays, ISM Index, productivity, and factory orders data may also move the market. The ADP payrolls data will be carefully watched even though the release does not always reflect the results of the employment report. It still provides another view of the employment situation.
LOOKING AHEAD
Economic
Indicator |
Release
Date and Time |
Consensus
Estimate |
Analysis |
| Personal Income and Outlays |
Monday,
Feb. 1,
8:30 am, et |
Income up 0.3%,
Outlays up 0.2% |
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
| Construction Spending |
Monday,
Feb. 1,
10:00 am, et |
Down 0.3% |
Low importance. An indication of economic strength. A significant decrease may lead to lower rates. |
| ISM Index |
Monday,
Feb. 1,
10:00 am, et |
56.7 |
Important. A measure of manufacturer sentiment. A large decline may lead to lower mortgage rates. |
| ADP Employment |
Wednesday,
Feb. 3,
8:30 am, et |
-90k |
Important. A measure of employment. A large decrease in payrolls may bring lower rates. |
| Preliminary Q4 Productivity |
Thursday,
Feb. 4,
8:30 am, et |
Up 5.9% |
Important. A measure of output per hour. Improvement may lead to lower mortgage rates. |
| Factory Orders |
Thursday,
Feb. 4,
10:00 am, et |
Up 1.5% |
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
ISM The Institute for Supply Management (ISM), formerly the National Association of Purchasing Management (NAPM), releases the “Report on Business” on the first working day of each month. Part of this report is the “diffusion index,” which tracks the economy’s ups and downs fairly well.
In conducting this survey, the ISM questions purchasing executives from over 250 industrial companies compiling data on production, orders, commodity prices, inventories, vendor performance, and employment. Each of the respondents is asked to rank the categories as “up” or “down.” Various weights are applied to the individual components to form the composite index.
A composite index reading of 50 can be thought of as a “swing point.” A reading above 50 implies an increase in economic activity, while a reading below 50 indicates a decline. As a general rule of thumb, when the index approaches 60, investors begin to worry about an overheated economy. A slide below 40 suggests that recession is at hand.
The ISM report is difficult for economists to forecast because there is little data upon which to base an educated guess. The report has a large “surprise factor” and can often prompt a significant market reaction. Be cautious.
Source: Courtesy of Todd Kabel, US Bank, Nashville, Tennessee
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February 1, 2010 -
Posted by kbargers |
economy, real estate | bargers solutions, composite index, economic indicators, institute for supply management, ism index, kenneth bargers, market comment, mortgage bond prices, mortgage interest rates, Nashville, national association of purchasing management, pce price, prudential woodmont realty, realtor, tennessee, todd kabel, us bank
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Market Comment for Week of February 1st
MARKET COMMENT Mortgage bond prices fell last week pushing mortgage interest rates slightly higher. Most of the data early in the week was bond-friendly. Unfortunately the Fed’s reminder that their purchases of mortgage bonds would cease after the first quarter sent bond prices tumbling Wednesday afternoon. This was followed by stronger than expected gross domestic product, employment cost index, and PCE price data Friday morning. Bonds were helped Friday afternoon as stocks remained jittery. Interest rates rose by about 1/8 of a discount point for the week.
The employment report Friday will be the most important event this week. Income, outlays, ISM Index, productivity, and factory orders data may also move the market. The ADP payrolls data will be carefully watched even though the release does not always reflect the results of the employment report. It still provides another view of the employment situation.
LOOKING AHEAD
Indicator
Date and Time
Estimate
Feb. 1,
8:30 am, et
Outlays up 0.2%
Feb. 1,
10:00 am, et
Feb. 1,
10:00 am, et
Feb. 3,
8:30 am, et
Feb. 4,
8:30 am, et
Feb. 4,
10:00 am, et
ISM The Institute for Supply Management (ISM), formerly the National Association of Purchasing Management (NAPM), releases the “Report on Business” on the first working day of each month. Part of this report is the “diffusion index,” which tracks the economy’s ups and downs fairly well.
In conducting this survey, the ISM questions purchasing executives from over 250 industrial companies compiling data on production, orders, commodity prices, inventories, vendor performance, and employment. Each of the respondents is asked to rank the categories as “up” or “down.” Various weights are applied to the individual components to form the composite index.
A composite index reading of 50 can be thought of as a “swing point.” A reading above 50 implies an increase in economic activity, while a reading below 50 indicates a decline. As a general rule of thumb, when the index approaches 60, investors begin to worry about an overheated economy. A slide below 40 suggests that recession is at hand.
The ISM report is difficult for economists to forecast because there is little data upon which to base an educated guess. The report has a large “surprise factor” and can often prompt a significant market reaction. Be cautious.
Source: Courtesy of Todd Kabel, US Bank, Nashville, Tennessee
Like this:
February 1, 2010 - Posted by kbargers | economy, real estate | bargers solutions, composite index, economic indicators, institute for supply management, ism index, kenneth bargers, market comment, mortgage bond prices, mortgage interest rates, Nashville, national association of purchasing management, pce price, prudential woodmont realty, realtor, tennessee, todd kabel, us bank