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A weekly look at where mortgage interest rates are headed. A weekly Economic Calendar is also included.

Market Commentary

Last week saw mortgage rates rise on news that trade wars with Europe have likely been averted. On Friday, gross domestic product came in at a 4.1% growth rate for the second quarter, slightly lower than expectations. yet the strongest growth since 2014. GDP saw consumer spending increase, business investment maintaining strong growth, and the trade deficit decline. However, many analysts are predicting GDP growth to slow in the second half of the year and end around 3%.

The highlight of this week’s US economic calendar is the FOMC policy announcement on Wednesday which is unlikely to generate a sharp market reaction since no meaningful policy changes are expected this time. With the economy expanding at a healthy pace, the FOMC is likely to maintain the upbeat assessment of growth outlook, paving the way for two more Fed Fund Rate hikes this year, most likely in September and December. Meanwhile, on Friday the economic data flow brings the latest employment report. Another firm increase in non-farm payrolls of close to 200k appears to be in the cards, which might nudge the unemployment rate lower, from 4.0% to 3.9%. Average hourly earnings growth should change little from rates of growth in recent months.

In addition to the labor market data, personal income and spending figures come out alongside PCE deflators on Tuesday, and the latest ISMs on Wednesday and Friday will be worth watching too. Today we will see only the pending home sales data due.

Economic Calendar for the week of 07/30/2018 to 08/03/2018:

Monday: Pending Home Sales and Dallas Fed Manufacturing Activity
Tuesday:  Personal Income, Personal Spending, PCE, Employment Cost Index, S&P CoreLogic 20-City Index, and Chicago Purchasing Manager
Wednesday: MBA Applications, ADP Employment Change, Markit US Manufacturing PMI, Construction Spending, ISM Employment, ISM Manufacturing, ISM Prices Paid, ISM New Orders, and FOMC Rate Decision
Thursday: Initial Jobless Claims, Continuing Claims, Bloomberg Consumer Comfort Index, Factory Orders, and Durable Goods
Friday: Trade Balance, Change in Manufacturing Payrolls, Change in Private Payrolls, Unemployment Rate, Underemployment Rate, Average Hourly Earnings, Labor Force Participation Rate, Markit US Services PMI, and Markit US Composite PMI

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