Mortgage Interest Rates: Economic Data For Week of Feb. 1st – Effect On Mortgage Interest Rates

Feb. 2 (FreeRateUpdate.com) — February is already upon us, and today lenders are showing higher interest rates to open the day.

The week ahead should be an interesting one for mortgage interest rates and financial markets alike. There is a sea of economic data that will wash ashore this week, and if you’re floating your interest rate, you may want to take an, “Expect the worst, hope for the best” stance, because it could be a bumpy ride…

    (For further explanations and expectations of any of the reports below, hover the cursor over the bold font to learn more.)

     Today, Monday, brings the Personal Income & Spending Report, the ISM Manufacturing index, and lastly and least the Construction Spending Report. There are 2 short term Treasury Bond Auctions later in the day that should have little more than a temporary effect on markets.

     Tuesday brings us the Pending Home Sales report. It also brings us Timothy Geitner and Paul Volcker speaking in front of the Senate Finance Committee.

    On the menu will be discussions about the US 2011 budget, and more importantly, potential regulations to address high risk bank activities. When the Fed Speaks, markets listen. If Wall Street does not like what it hears on the new regulations, we could expect to see a negative reaction from Wall Street, and a flight to Bonds in the afternoon’s auction. If you have time to wait on your floating interest rate, this may be the day to finally lock in.

   On Wednesday, the ADP Private Employment Survey is expected to show more job losses in the private sector, and has the potential to affect mortgage rates significantly.

    Also on Wednesday, the ISM Non-Manufacturing index. Typically, analysts look at this reading as indicative of employment. A low reading could foreshadow higher unemployment.

    Amongst other releases scheduled for Thursday, the Jobless Claims report  is being deemed unreliable by some analysts. While most are expecting to see a rise in initial jobless claims, the fact that many are calling the data skewed may come into play when markets react to the report. What, if any, effect this will have on markets and interest rates remains to be seen.

     Friday brings us the what should be the single most important release of the month with the Nonfarm Payrolls report. Analysts are cautiously expecting a reading of zero growth or job losses. A swing in either directions will almost certainly have an effect on mortgage interest rates. If you’ve bravely floated through the week thus far, you’ll want to pay close attention to Friday morning.

     Also on Friday, Consumer Credit and the Unemployment Rate will be released. Neither is expected to have any sort of surprise impact to markets as analysts will adjust thier expectations on the data is released earlier in the week. For example, we could see revised expectations for Friday’s unemployment after employment related releases on Wednesday and Thursday.

      The best advice I can dole out today is to wait and see. If my mother were floating her interest rate today, I would advise her to continue doing so, but cautiously. (The Fed is still buying mortgage backed securities until sometime next month, so we can expect to continue to see rates remain low for the near future.)