The economic data in the August 21 week will take a backseat to the annual Jackson Hole Symposium over the three days of August 24-26. This year’s topic is “Structural Shifts in the Global Economy”. The annual meeting of the minds is intended to have a more academic tone, but the gathering of policymakers means it is an opportunity to gauge their policy leanings. The focus will be on remarks from US central bankers regarding the outlook for Federal Reserve monetary policy. Powel is scheduled to give his speech on the “Economic Outlook” at 10:05 ET on Friday.
Markets will be listening for any signal about the next steps in FOMC interest rate decisions. The most immediate question is whether there will or will not be a rate hike at the September 19-20 meeting. After that, it will be the tone of a more general outlook for inflation and employment and if that means Fed policymakers are at or nearing the end of the current tightening cycle.
The economic data may feel a bit out of date. In particular, the June numbers on sales of existing homes at 10:00 ET on Tuesday and new single-family homes at 10:00 ET on Wednesday will not have caught up with the more recent jump in mortgage rates. Nevertheless, sales of existing homes should continue to reflect the squeeze that limited supplies of homes available for sale have put on that side of the housing market. Sales of existing homes are closings of contracts taken out a month or more before July. Some of the sales activity will be due to potential homebuyers who managed to pre-qualify for a mortgage at a lower rate in May or June who were lucky enough to find a suitable home to purchase.
This will be true for sales of new single-family homes as well. However, for new homes, those who have a mortgage loan already secured can commit to buying a home that has not yet started or is under construction. The lack of inventory of existing units is driving homebuyers to look at new homes. Historically new homes accounted for about one-fifth of sales, but at present it is close to a third.
Where a household has a mortgage rate roughly under 6 percent, it is more likely to spend on renovation and repair rather than give up a more affordable loan. This will keep existing units off the market until rates decline again. At present, the rate for a 30-year fixed rate mortgage is around 7 percent, the highest in over 20 years. This is driving some buyers to take out adjustable-rate mortgages to reduce their initial monthly payments while hoping to refinance at a lower rate before the reset. In turn, this sets up a potential wave of refinancing activity when mortgage rates decline enough to make it worthwhile to get a fixed rate at or below the rate of the original ARM loan.
—
Originally Posted August 18, 2023 – High points for economic data scheduled for August 21 week
Disclosure: Econoday Inc.
Important Legal Notice: Econoday has attempted to verify the information contained in this calendar. However, any aspect of such info may change without notice. Econoday does not provide investment advice, and does not represent that any of the information or related analysis is accurate or complete at any time.
© 1998-2022 Econoday, Inc. All Rights Reserved
Disclosure: Interactive Brokers
Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.
This material is from Econoday Inc. and is being posted with its permission. The views expressed in this material are solely those of the author and/or Econoday Inc. and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
Join The Conversation
If you have a general question, it may already be covered in our FAQs. If you have an account-specific question or concern, please reach out to Client Services.