Don Grimes

This week brings us only one monthly economic report for the markets to digest and it is not considered to be of high importance. This means that the week will be left mostly up to the stock markets and other influences since there is a lack of factual data for bonds to trade on. In addition to the one report, we will also get the minutes from the last FOMC meeting that can also cause movement in rates if it reveals any surprises.

The first news of the week comes Tuesday afternoon when the Fed will release the minutes to 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 inflation and the Fed's next move. If the Fed members were concerned about inflationary pressures, we may see the bond market move lower and mortgage rates higher Tuesday afternoon. However, if they indicate that inflation is easing and that a rate increase is not likely in the coming months, we s hould see the bond market rise and mortgage rates drop during afternoon trading.

The only factual economic data of the week will be posted Friday morning. August's Goods and Services Trade Balance will be released that day, but is not likely to cause much of a change in mortgage pricing. It will give us the size of the U.S. trade deficit, but usually does not lead to significant movement in bond prices or mortgage rates.

Also worth noting are two public speaking engagements by Fed Chairman Bernanke Monday and Tuesday. I don't expect them to have much of an impact on the markets, but his words always have the potential to create a reaction in trading. He will be speaking at the annual meeting of the National Association for Business Economics, but I don't see this to likely affect mortgage rates.

Overall, I suspect this is going to be fairly quiet week for the bond market and mortgage rates, especially compared to last week. For the most p art, I believe the week will be left to the stock markets and the Fed minutes. The most important day of the week is likely Tuesday with the Fed minutes, but any day of significant stock volatility may make that particular day the most eventful. The bond market will close early Friday in observance of Monday's Columbus Day holiday, but it will also likely be a non-event to the markets.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

This week brings us the release of five monthly economic reports for the bond market to digest. August's Personal Income and Outlays is the week's first data and will be released tomorrow morning. It gives us an indication of consumer ability to spend and current spending habits. This is important to the markets because consumer spending makes up 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 bad news for the bond market and mortgage rates because it raises inflation concerns, making long-term securities such as mortgage related bonds less attractive to investors. It is expected to show a 0.2% rise in income and a 0.2% increase in spending.

The next is Tuesday's Consumer Confidence Index (CCI) for September. This Conference Board index will be posted at 10:00 AM and gives us a measurement of consumer willingness to spend. It is expected to show a decline from last month's reading, indicating that consumers are less likely to make large purchases in the near future. This is good news for the bond market and mortgage rates. Analysts are calling for a reading of approximately 55.0, down from August's 56.9. If we see a larger than expected decline, we should see the bond market move higher and mortgage rates drop Tuesday.

The Institute for Supply Management (ISM) will post their manufacturing index for September late Wednesday morning. This index gives us an indication of manufacturer sentiment. Analysts are expecting little change from last month's 49.9 reading. The 50.0 benchmark is extremely important because a reading below that level means more surveyed executives felt business worsened than those who said it had improved. This data is important not only because it measures manufacturer sentiment, but it is very recent data. Some economic releases track data that are 30-60 days old, but the ISM index is o nly a few weeks old. If we get a smaller than expected reading, I expect to see the bond market rally and mortgage rates fall Wednesday morning.

The next release is Thursday when the Commerce Department will post August's Factory Orders data. This manufacturing sector report is similar to last week's Durable Goods Orders release, but includes orders for non-durable goods. It can usually impact the financial markets enough to change mortgage rates if it varies from forecasts by a wide margin. Current forecasts are calling for a decline in new orders of approximately 1.8%. An unexpected rise could drive mortgage rates higher, while a weaker than expected reading should push them lower Thursday.

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 and average hourly earnings. These are considered to be very important readings of the employment se ctor 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.

Weaker than expected readings should help boost bond prices and lower mortgage rates Friday. However, stronger then forecasted readings could be disastrous for mortgage pricing. Analysts are expecting to see the unemployment rate 6.1%, a decline in new payrolls of approximately 90,000 and a 0.3% increase in earnings.

Overall, it is going to be a very active week in the markets and mortgage rates. The most important day will likely be Friday due to the employment report being scheduled, but Tuesday's and Wednesday's data can also fairly heavily influence mortgage rates. With important data being released each day of the week, I would recommend maintaining contact with your mortgage professional.

If I were considering financing/refinancing a home, I would.... Loc k if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Lock if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

There are only four pieces of economic news scheduled for release this week and one of them is a highly important inflation reading. We also have another Federal Open Market Committee (FOMC) meeting, which likely will not bring a change to key short-term interest rates. There is a pretty good possibility of seeing a fair amount of volatility in the markets and likely mortgage rates the next several days.

The first report of the week is August's Industrial Production data tomorrow morning. 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 cause movement in mortgage rates. Analysts are currently expecting to see a 0.3% decline in production. A higher level of output could lead to higher mortgage rates, while a weaker than expected figure should help push rates slightly lower.

August's Consumer Price Ind ex (CPI) will be released Tuesday morning at 8:30 am ET. The CPI is one of the most important reports we see each and every month. It is considered to be a key indicator of inflation at the consumer level of the economy. There are two readings in the report- the overall index and the core data reading. Current forecasts are calling for no change in the overall reading and a 0.2% rise in the core data reading. A larger increase in the core data would likely lead to higher mortgage rates Tuesday, while a smaller increase would be good news.

The FOMC meeting will adjourn at 2:15 PM Tuesday. There is little debate about a possible change to key short-term interest rates at this meeting. The overwhelming consensus is that there will be no change to rates at this meeting. However, the post-meeting statement could very well lead to volatility during afternoon trading as investors dissect it in an effort to find the Fed's expected next move. The wild card is how the ma rkets react to the statement. If we see significant weakness in stocks, the bond market may benefit as a safe-haven from the volatility. This could lead to lower mortgage rates Tuesday afternoon and Wednesday morning.

August's Housing Starts report will be released 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, but is usually considered to be of low importance to the financial markets.

Late Thursday morning, the Conference Board will release its Leading Economic Indicators (LEI). This index attempts to measure economic activity over the next three to six months. If it estimates an increase in activity, the bond market will probably fall and mortgage rates will rise slightly. If it shows weaker than expected readings, the bond market may rally and mortgage rates should fall. Current forecasts are calling for a 0.2% decline from July's reading.

Overall, I expect to see some pressure in bonds tomorrow as investors prepare for Tuesday's events. Tuesday will most likely be the most important day of the week with the CPI release and the FOMC meeting. If the CPI eases inflation concerns and the Fed statement doesn't reveal any negative surprises, we will most likely see mortgage rates move lower for the week.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

This week brings us the release of four pieces of economic data, with three of them likely to affect mortgage rates. There is no relevant data scheduled for release until Thursday and the most important reports are all scheduled for release Friday. Therefore, look for the biggest changes to rates the latter part of the week.

The first report of the week is not considered to be of high importance. July's Goods and Services Trade Balance data will be posted Thursday morning, giving us the size of the U.S. trade deficit. It is expected to show a deficit of approximately $58.0 billion, which would be an increase from June's $56.8 billion. However, I would consider this the least important of this week's releases, meaning it will likely have little impact on bond trading or mortgage rates.

Also worth noting is the 10-year Treasury Note auction Thursday. It is fairly common to see some weakness in bonds before these sales as investors prepare for them. But, if the sales are met with a decent demand from investors, those losses are normally recovered after the results are announced. The results will be posted at 1:00 pm ET Thursday. If demand was strong, particularly from international investors, we should see mortgage rates improve Thursday afternoon.

Friday brings us the release of three pieces of relevant data. The first is the release of August's Retail Sales report. It will give us a measurement of consumer spending, which is very important to the markets because consumer spending makes up two-thirds of the U.S. economy. Current forecasts are calling for a 0.1% increase in sales. If we see a higher level of spending than is forecasted, the bond market will most likely fall and mortgage rates will rise. However, a weaker than expected reading could push bond prices higher and mortgage rates lower Friday.

The second important piece of data Friday morning is the release of Augus t's Producer Price Index (PPI). This report will give us a very 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 because it excludes more volatile food and energy prices. Analysts are currently calling for a 0.3% decline 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 and lead to an increase in mortgage rates Friday morning.

The last report of the week comes from the University of Michigan. Their consumer sentiment index will give us an indication of consumer confidence, which hints at consumers' willingness to spend. If confidence is rising, consumers are more apt to make large purchases. But, if they are growing more concerned of their personal financial si tuations, 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 63.9.

Overall, the latter part of the week will likely be pretty active for the bond market and mortgage rates. Friday's Retail Sales and PPI reports are the week's most important and make Friday the biggest day of the week. If we see weaker than expected readings in that data, we should see mortgage rates move lower for the week. However, stronger than expected readings will likely drive bond prices lower and mortgage rates higher.

I am holding the float recommendations for now, but could change if there is a lackluster interest in the 10-year auction or if Friday's data shows stronger than expected results. We may also see the stock markets significantly influence bond trading, so look for sizable movement in the major indexes to also lead to a possible change in recomme ndations. This weekend's news about the Fed taking control of Fannie Mae and Freddie Mac will likely drive their stock prices lower and could affect the broader markets. That may start the week off with lower mortgage rates.

If I were considering financing/refinancing a home, I would.... Float if my closing was taking place within 7 days... Float if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot be guaranteed to be in the best interest of all/any other borrowers.

There are five relevant economic reports scheduled for release this week, but they are being posted over four days because the markets were closed on Monday in observance of the Labor Day holiday.

The first piece of data this week comes tomorrow morning with the release of the Institute for Supply Management's (ISM) manufacturing index at 10:00 AM ET. This index measures manufacturer sentiment and is expected to show a decline from last month's reading of 50.0 to 49.5 in August. A reading above 50 means that more surveyed manufacturers felt business improved during the month than those who felt it worsened. An increase in the index would probably cause a rally in the stock markets and lead to mortgage rates rising tomorrow, while a reading below 49.5 should lead to lower rates.

The second report of the week is July's Factory Orders data Wednesday morning. This report measures manufacturing sector strength and is similar to last wee k's Durable Goods Orders, but includes orders for both durable and non-durable goods. This data is expected to show a 0.4% increase in new orders. A smaller than expected rise should lead to lower mortgage rates Wednesday.

Also scheduled for release is the Wednesday afternoon Federal Reserve release of its Beige Book report. This report details current economic conditions in the U.S. by region. It is believed to be a key source of data when the Fed meets for their FOMC meetings. It is usually released approximately two weeks prior to each FOMC meeting. If the 2:00 PM ET release reveals any significant surprises, we may see movement in the markets and mortgage pricing as analysts adjust their theories on the Fed's next interest rate move. Most likely though, it will be a non-event and will not lead to a change in mortgage rates.

Thursday morning brings us the revision to the 2nd Quarter Productivity numbers, which measures employee productivity in the wo rkplace. It is expected to show an upward change from the previous estimate of a 2.2% annual pace. Forecasts are currently calling for a reading of 2.9%, which would be good news for the bond market and possibly lead to slightly lower mortgage rates Thursday morning.

The big 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. The ideal scenario for the bond market and mortgage rates is rising unemployment, a smaller than expected rise in new payrolls and earnings to remain unchanged. If we are that fortunate, I expect to see mortgage rates drop considerably Friday morning. Analysts are expecting to see the unemployment rate remain at 5.7% and 70,000 jobs lost in the month. Weaker then expected readings would be very good news for bonds and mortgage rates.

Overall, I expect to see the most movement in rates Friday, but Tuesday s hould also be fairly active. I am holding the short-term lock recommendations for the time being as there still seems to be plenty of profit taking opportunities for traders if they choose to do so. This could lead to a spike in mortgage rates if traders sell holdings to capture those gains. This does not mean that I think rates will necessarily move higher. It means that I feel the risk versus the potential reward of continuing to float an interest rate is leaning heavily towards the risky side. Accordingly, locking seems to be the prudent position at this time.

If I were considering financing/refinancing a home, I would.... Lock if my closing was taking place within 7 days... Lock if my closing was taking place between 8 and 20 days... Float if my closing was taking place between 21 and 60 days... Float if my closing was taking place over 60 days from now... This is only my opinion of what I would do if I were financing a home. It is only an opinion and cannot b e guaranteed to be in the best interest of all/any other borrowers.