Indexes Affecting Rate Lock

Medium

Negative

Personal Income and Outlays

August's Personal Income and Outlays report was the first of this morning’s two economic releases. It showed that personal income rose 0.3% and spending rose 0.4%. The income reading pegged forecasts, but spending came in higher than the 0.2% that was expected. These readings hint at economic strength with consumers having more money to spend and actually spent more than thought. Accordingly, we are labeling this part of the report neutral to slightly negative for mortgage rates.

High

Negative

Inflation News

Another reading in the report is not so murky. The Fed’s preferred inflation reading, the Personal Consumption Expenditures (PCE) index, was clearly bad news for bonds and mortgage rates. The overall PCE rose 0.3%, exceeding predictions of 0.2% while the more important core PCE jumped 0.6% when it was expected to rise 0.4%. From the Fed’s perspective, these readings indicate inflation is still on the rise and further aggressive measures (rate hikes) will be needed to get it moving lower. Since inflation erodes the value of a long-term bond’s future fixed interest payments and causes them to be sold at a discount to offset inflation, this part of the report is bad news for rates.

Medium

Positive

Univ of Mich Consumer Sentiment (Rev)

Second was the University of Michigan's revised Index of Consumer Sentiment for September at 10:00 AM ET. They announced a reading of 58.6, down from the initial estimate of 59.5 from two weeks ago. The downward change is a sign that surveyed consumers were less optimistic about their own financial situations than earlier this month. Waning confidence usually translates into weaker consumer spending levels, making the data good news for bonds and mortgage rates.

High

Unknown

ISM Index (Institute for Supply Management)

Next week doesn’t have a large number of reports scheduled, but most of what is set for release is expected to heavily influence rates. The batch includes the traditional new month reports of the ISM manufacturing index Monday and September’s almighty monthly Employment report Friday. As we saw this week, it doesn’t take surprisingly strong or weak economic news for the markets to get volatile. We will also be watching the geopolitical events that were the strongest force behind this week’s movement in rates. Look for details on all of next week’s activities in Sunday evening’s weekly preview.

Rate Lock Advisory

Mortgage Rate Trend

Indexes Affecting Rate Lock

Personal Income and Outlays

Inflation News

Univ of Mich Consumer Sentiment (Rev)

ISM Index (Institute for Supply Management)

Float / Lock Recommendation