Don Grimes

This week brings us the release of only three pieces of economic data, but none of them are considered to be highly important. In addition to the economic releases, we also have two Treasury auctions that may play a role in this week's mortgage pricing. The markets are closed tomorrow in observance of the Labor Day holiday, meaning mortgage lenders will follow suit.

The first release of the week comes Wednesday afternoon. Most likely though, it will be a non-event and will not lead to a noticeable change in mortgage rates.

Also Wednesday is the 10-year Treasury Note auction, which will be followed by the 30-year Bond auction Thursday. If demand was strong, particularly from international investors, we should see mortgage rates improve during afternoon trading Wednesday and Thursday.

July's Goods and Services Trade Balance data will be posted early Thursday morning, giving us the size of the U.S. trade deficit. It is expected to show a deficit of approximately $27.4 billion, which would be a small increase from June's $27.0 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 regardless of its results.

The last report of the week will be posted by the University of Michigan. Their Index of Consumer Sentiment 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 situations, 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 67.8 that would mean confidence rose from August's final reading. That would be considered bad news for bonds and mortgage rates.

Overall, this week looks like it will be much less active for mortgage rates than last week was. With the financial markets closed tomorrow, we only have four days of trading. There is no particular data that is important enough to label its day of release as the mo st important of the week. This may allow the stock markets to heavily influence bond trading and therefore, impact mortgage rates this week. As long as the stock markets do not stage a sizable rally or sell-off this week, I believe we will only see minor changes to mortgage rates the next few days.

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.

There are four relevant economic reports scheduled for release this week in addition to the minutes from the most recent Fed monetary policy meeting. There is no relevant data scheduled for release tomorrow, so look for the stock markets to directly affect bond trading and mortgage rates.

The first piece of data comes Tuesday morning with the release of the Institute for Supply Management's (ISM) manufacturing index at 10:00 AM ET. Analysts are expecting a reading of 50.2, which would be the first reading above 50.0 since January 2 008 and indicate that the manufacturing sector is growing.

The second report of the week is the revision to the 2nd Quarter Productivity numbers, which measures employee productivity in the workplace. A larger than expected reading would be considered good news for bonds and mortgage rates.

Also Wednesday morning comes July's Factory Orders data. A smaller than expected rise should lead to lower mortgage rates Wednesday, as long as the productivity number doesn't hurt bond prices.

The third and final event for Wednesday is the release of the minutes from the last FOMC meeting. There is a pretty good possibility of the markets reacting to them following their 2:00 PM ET release, especially if they show some divisiveness by its members. It will be interesting to see some of the Fed member's views on the economy and inflation and if they will hint what the Fed's next move may be. But this is one of those events that can cause significant movement in rates after its release or be a non-factor. It generally causes a little movement in bond prices but not enough to significantly affect mortgage pricing.

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 larger than expected drop in payrolls and earnings to remain unchang ed. Analysts are expecting to see that the unemployment rate moved from 9.4% to 9.5% and that 225,000 jobs were lost during the month. Weaker then expected readings would be very good news for bonds and lead to lower mortgage rates Friday. However, if we get stronger than expected numbers, mortgage rates will probably spike higher Friday.

Overall, I expect to see the most movement in rates Friday, but Tuesday and Wednesday should also be fairly active. Tomorrow or Thursday will likely be the calmest day due to the lack of any monthly or quarterly data being posted. Also worth mentioning though is the fact that next Monday is Labor Day so all markets will be closed. The bond market will not close early this Friday, but many traders may head home for the long weekend after Friday's data is posted. This means that trading will likely be thin Friday afternoon even though the markets will still be open. This could lead to additional volatility in rates as traders prepare for the long weekend, so please be careful this week if still floating an interest rate.

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 six relevant economic releases for the bond market to watch in addition to two important Treasury auctions. There is no relevant data or news expected to be released tomorrow, so look for the stock markets to heavily influence bond trading and mortgage rates until we get to the factual economic reports.

The Conference Board will post this week's first relevant economic report late Tuesday morning with the release of August's Consumer Confidence Index (CCI). That sign of economic weakness should drive bond prices higher, leading to lower mortgage rates Tuesday. It is expected to show a reading of 48.0 , which would be an increase from July's 46.6.

The Commerce Department will post July's Durable Goods Orders Wednesday morning, giving us an important measure of manufacturing sector strength. A much weaker reading than the expected 3.2% rise that is expected would indicate that the manufacturing sector is not as strong as thought. This would be good news for bonds and should lead to lower mortgage rates.

Also scheduled for release Wednesday is July's New Home Sales data. It usually doesn't have a major impact on bond prices or mortgage rates unless it varies greatly from forecasts.

Thursday's only data is th e first revision to the 2nd Quarter Gross Domestic Product (GDP). Last month's preliminary reading revealed that the economy declined at an annual rate of 1.0%. A larger than expected downward revision should help lower mortgage rates Thursday, especially if the inflation portion of the release does not get revised higher. Current forecasts are calling for a revised reading of down 1.4%. There will be a final revision issued next month, but it probably will have little impact on mortgage rates.

Friday is a multi-release day with the release of July's Personal Income and Outlays report and the University of Michigan Index of Consumer Sentiment. The income and spending data measures consumer ability to spend and current spending habits. It is expected to show an increase of 0.1% in income and a 0.2% increase in spending. Weaker than expected numbers would be good news for the bond market and mortgage rates.

August's revision to the U niversity of Michigan's Index of Consumer Sentiment is also due Friday morning. It gives us a measurement of consumer willingness to spend. It is expected to show an upward revision from August's preliminary reading of 61.7. If it revises lower, consumers were less confident about their personal financial situations than previously thought. This would be good news for the bond market and mortgage rates.

Also worth mentioning are a couple of Treasury auctions that may affect bond trading and mortgage rates this week. The two most important are Wednesday's 5-year Note and Thursday's 7-year Note sales. Results of this week's auctions will be posted 1:00 PM ET each day. If investor interest is strong in the auctions, we can expect the broader bond market to rally and mortgage rates to move lower. However, lackluster demand could lead to bond selling and higher mortgage rates Wednesday and Thursday afternoons.

Overall, we will likely see the most activity in rates Tuesday morning, but Wednesday and Thursday are also important. If we manage to get weaker than expected results in the key reports and the auctions go well, we should see mortgage rates close the week lower than tomorrow's opening levels. But stronger than expected results in the economic reports and disappointing results in the Treasury sales will most likely lead to rates moving higher this 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 reports that may influence mortgage rates, but only one of them is considered to be highly important. With no relevant auctions or speeches on tap, I suspect we will see much less movement in mortgage rates this week compared to the past couple of weeks. There is no relevant data scheduled for release tomorrow, so look for the stock markets to drive bond trading and mortgage rates.

There are two reports scheduled to be posted Tuesday morning. The first is July's Producer Price Index (PPI) that gives us an indication of inflation at the producer level of the economy. A larger increase in the core d ata could push mortgage rates higher Tuesday morning. If it reveals weaker than expected readings, we may see mortgage rates improve as a result.

The second report of the day is July's Housing Starts data. This report gives us an indication of housing sector strength and mortgage credit demand. However, it isn't considered to be of high importance to the bond market or mortgage pricing and usually doesn't cause much movement in mortgage rates unless it varies greatly from forecasts.

The Conference Board will give us the its Leading Economic Indicators (LEI) for July late Thursday morning. This index attempts to measure economic activity over the next three to six months and is considered to be moderately important. Current forecasts are calling for an increase of 0.6% in the index, indicating economic growth over the next couple of months.

July's Existing Home Sales will close out the week's data Friday morning. The National Association of Realtors will release this report, giving us a measurement of housing sector strength. It covers approximately 85% of home sales in the U.S., but usually does not have a major influence on bond trading and mortgage rates unless it varies greatly from analysts' forecasts. It is expected to show an increase from June's sa les, meaning the housing sector is strengthening.

Overall, look for Tuesday to be the busiest day of the week with the PPI being released. The rest of the week will likely be influenced more by stock prices than anything else, which may be quite volatile. Therefore, keep an eye on the markets and maintain contact with your mortgage professional if you have not locked an interest rate yet.

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 six relevant economic reports in addition to another FOMC meeting. The first is Employee Productivity and Costs data for the second quarter that will be released Tuesday morning. It will give us an indication of employee output. High levels of productivity are believed to allow the economy to grow without fears of inflation. I don't see this being a big mover of mortgage pricing, but since it is the only data of the day it may influence rates slightly. Analysts are currently expecting to see an increase in productivity of 5.4%. A higher than expected reading could help improve bonds, leading to lower mortgage rates Tuesday. June's Trade Balance report will be released Wednesday morning. It gives us the size of the U.S. trade deficit but is the week's least important report and likely will have little impact on the bond market and mortgage rates. Analysts are expecting to see a $28.5 billion deficit, but it will take a wide variance to directly influence mortgage pricing.

The FOMC meeting will begin Tuesday morning and adjourn at 2:15 PM ET Wednesday. It is expected to yield no change to key interest rates. Usually, the post-meeting comments seem to have more of an influence on the markets than the rate adjustments themselves, or a lack of one in many cases. Look for the statement to lead to volatility during afternoon trading if it hints at what the Fed's next move may be and when it will come. If the statement does not give us new information, mortgage rates will probably move little after its release.

Thursday morning's sole monthly report is July's Retail Sales data. This data is very important to the financial markets and mortgage rates because it helps us measure consumer spending. Current forecasts are calling for an increase of 0.7%.

Friday brings us the release of three reports. The first is July's Consumer Price Index (CPI) at 8:30 AM. The more important of the two is the core data because it excludes more volatile food and energy prices. Current forecasts call for no change in the overall index and a 0.1% increase in the core data reading. Declines in the readings, especially in the core data, should lead to a bond rally and lower mort gage rates. However, stronger than expected readings will likely cause a spike in mortgage pricing Friday.

The remaining two pieces of data are relevant to mortgage rates but not nearly important as the CPI is. The second report of the day is Industrial Production data for July. 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 of moderately high importance and may cause movement in mortgage rates. Analysts are currently expecting to see a 0.4% increase in production between June and July. A larger increase in output could lead to higher mortgage rates Friday, but only if the CPI is a non-factor.

The last report of the day will come from the University of Michigan who will release its Index of Consumer Sentiment for August at 9:45 AM. This index gives us a measurement of consumer willingness to spend. If confidence is rising, then co nsumers are more apt to make large purchases. This helps fuel consumer spending and economic growth. A drop in confidence will probably help boost bond prices. If the index rises, indicating that confidence is rising and spending is likely to continue, we may see mortgage rates move higher Friday morning. However, this is the least important of the day's three reports and will probably have the least impact on rates.

Also worth noting are two important Treasury auctions this week. The sale of 10-year Notes will be held Wednesday while 30-year Bonds will be sold Thursday. We often see some weakness in bonds ahead of the sales as the firms participating prepare for them. However, as long as they are met with decent demand from investors, the firms usually buy them back. This tends to help recover any presale losses. But, if the sales are met with a lackluster interest from investors- particularly international buyers, the bond market may move lo wer after the results are posted and mortgage rates may move higher. Those results will be announced at 1:00 PM each sale day.

Overall, look for the most movement in bond prices and mortgage rates the second half of the week. Thursday or Friday will likely turn out to be the most important day. If we get stronger than expected results in the Retail Sales and CPI releases, I fear that we may see mortgage rates spike higher fairly quickly. I suspect the FOMC meeting will not have as much of an influence on mortgage rates as recent meetings have, but the markets can react wildly to a single word or omission of a word in the statement, so we need to be cautious. This is certainly another week that continuous contact with your mortgage professional is highly recommended if you are still floating an interest rate.

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 takin g place between 8 and 20 days...

Lock if my closing was taking place between 21 and 60 days...

Lock 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.