Princeton Capital Blog

This Week’s Market Commentary

June 5th, 2017

This week is very light with only two pieces of monthly or quarterly economic data that are relevant to mortgage rates and they both come Monday morning. None of this week's data is considered to be highly important, meaning that we may see a relatively calm week for mortgage rates if comparing to last week.

Revised 1st Quarter Productivity and Costs data will be posted early Monday morning. This data measures employee output and employer costs for wages and benefits. It is considered to be moderately important because it helps us measure wage inflation. Many analysts believe that the economy can grow with low inflationary pressures when productivity is high. Last month’s preliminary reading revealed a 0.6% decline in productivity and a 3.0% increase in labor costs. Monday’s update is predicted to show that productivity fell at a 0.2% annual rate while labor costs rose 2.4%. I don’t think this piece of data will have much of an impact on the bond market or mortgage pricing unless it varies greatly from expectations and stocks remain calm.

The second release of the day will come from the Commerce Department at 10:00 AM. They will post April’s Factory Orders report that is similar to the Durable Goods Orders data that was released late last month. This release also includes orders for non-durable goods such as food and clothing. It can cause some movement in the financial markets if it varies from forecasts by a wide margin, but it isn’t expected to cause much of a change in rates. Current forecasts are calling for a 0.2% decline in new orders from March’s level.

The rest of the week will likely be driven by non-economic factors. One key event is former FBI Director James Comey's expected Senate testimony Thursday that will be centerstage. If he does testify, we can expect the markets to have some type of reaction to the proceedings. It is more likely that we will hear things that will be bond favorable, but how strong of a reaction they will have remains to be seen.

Overall, Monday has a possibility of being the most active day for mortgage rates following this weekend's terror attack in London and two economic reports being posted. Thursday also is a day that we may see noticeable movement in rates as a result of news out of Washington. The calmest day could be any other day with so little on the calendar. Despite the light week, it is still recommended to maintain contact with your mortgage professional if still floating an interest rate and closing in the near future.

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