This week brings us the release of three monthly economic reports that may impact mortgage rates, none of which is considered to be highly influential. In addition to the economic data, there is also a Treasury auction mid-week and corporate earnings releases each day of the week. It starts off light with nothing of importance scheduled for tomorrow.
Tuesday also does not have any relevant economic data set for release. However, executives from some of the largest pharmaceutical companies will be testifying before a House committee regarding progress in developing a Covid-19 vaccine. Their words may come into play as a vaccine is believed to be extremely good news for the economy. During stronger economic conditions, stocks tend to be the investment of choice, causing bonds to suffer and mortgage rates to move higher. Therefore, encouraging news during Tuesday’s testimony could pressure bonds and lead to an increase in mortgage pricing. The key point to watch for is when a vaccine may be widely available to the public. Predictions of this year will probably be taken as bad news in the bond market. On the other hand, a consensus is that one will be available during the spring of next year (or later) should fuel bond buying and lower rates.
June's Existing Home Sales from the National Association of Realtors will kick off the week's economic calendar late Wednesday morning. This report gives us a measurement of housing sector strength and mortgage credit demand. Current forecasts are calling for a relatively large increase from May's sales. A drop in sales would be considered good news for bonds and mortgage rates because a weakening housing sector makes broader economic growth more difficult. However, unless this data varies greatly from forecasts it probably will lead to only a minor change in mortgage rates.
Also Wednesday is a 20-year Treasury bond auction. Results will be posted at 1:00 PM ET, making this an early afternoon event. A strong demand for the securities could help improve bonds and lead to slightly lower mortgage rates. However, if investor interest in the sale was lackluster, we could see bonds weaken and mortgage rates move higher Wednesday afternoon.
In addition to last week’s unemployment figures, Thursday also has a monthly release. June's Leading Economic Indicators (LEI) will be posted at 10:00 AM ET. This Conference Board index attempts to measure economic activity over the next three to six months. While it is not a factual report, it still is considered to be of moderate importance to the bond market. It is expected to show a 2.6% increase, meaning it is predicting strong economic growth over the next few months. A smaller increase, or a decline, in the index would be good news for the bond and mortgage markets.
We will get another housing sector release late Friday morning when the Commerce Department posts June's New Home Sales report. This data tracks sales of newly constructed homes, but they make up a much smaller portion of the housing sector than existing home sales. Analysts are expecting to see a rise from May's sales, indicating that the new home portion of the housing sector strengthened last month. Favorable news would be a sizable decline in sales.
Corporate earnings season kicks into high gear this week. These announcements don’t directly impact mortgage rates, but they do heavily influence stocks, which can have an indirect impact on bond trading and mortgage pricing. Generally speaking, bad news for stocks is good news for bonds and rates. If some of the major companies reporting this week announce weaker than expected earnings and/or future earnings projections, stocks should move lower along with mortgage rates.
Overall, no day stands out as likely to be the most active for mortgage rates. Tuesday is a good candidate if the vaccine testimony affects the markets. The calmest day for rates may be Friday, assuming corporate earnings don’t cause a big move in stocks. Despite the small number of economic releases scheduled, rates may still be moderately active this week. Therefore, it would be prudent to keep an eye on the markets if still floating an interest rate and closing in the near future.