Mortgage Market Update

Following several weeks with many economic reports, Fed appearances and other events to drive the markets and mortgage rates, we get somewhat of a reprieve this week. There is just one monthly and one weekly report scheduled that are worth watching, along with the minutes from last month’s FOMC meeting. This light of a calendar should help keep mortgage rates relatively calm this week, unless something unexpected happens.

The week starts with the markets closed for the Independence Day holiday tomorrow. The bond and stock markets will reopen for regular trading hours Tuesday.

Tuesday morning has the release of the Institute for Supply Management’s (ISM) non-manufacturing index, scheduled at 10:00 AM ET. This index tracks sentiment from business executives in the non-manufacturing sector, also known as the services index. It is similar to the ISM manufacturing index that was posted last week, but does not draw as much attention from traders. With so little scheduled this week though, we could see this report have a stronger influence on the bond market and mortgage rates than it usually does. It is expected to show a reading of 63.5. The lower the reading, the weaker sentiment was and the better the news it is for mortgage rates.

Minutes from the June 15-16th FOMC meeting are next. They will be posted at 2:00 PM ET Wednesday, making this an afternoon event for rates. There is a possibility of the markets reacting to them, but I don't believe they will reveal a significant surprise that we did not get from the post-meeting statement, revised economic projections and press conference back on the 16th. Bond traders are looking for feelings about inflation, tapering the Fed’s bond buying program and when they expect to start raising key short-term interest rates. If there is a reaction, it will come during mid-afternoon hours Wednesday.

The weekly report will be last week's unemployment figures early Thursday morning. They are expected to show that 350,000 new claims for unemployment benefits were filed last week, down from the previous week's 364,000 initial filings. Rising new claims signals a weaker employment sector. Therefore, the larger the number, the better the news it is for mortgage rates.

Overall, no day stands out as critical, or even the clear best candidate for most active day. The calmest day may end up being Friday. While there is little scheduled this week that is expected to influence rates, it still would be prudent to watch the markets if still floating an interest rate since the markets can get active without notice.