Additional evidence appeared last week that we may be very close to the bottom of this recession.While it is the nineteenth straight month of job losses, July saw only 247,000 jobs lost with a tiny improvement in the unemployment rate. The ISM Manufacturing Index also revealed greater signs of life than expected. Mortgage rates did end the week with some upward pressure that may continue into this week, especially if the positive economic news continues.
While this week is packed with important economic data, the most influential news of the week could be the policy announcement that accompanies the Fed’s rate decision. The Fed is expected to leave rates unchanged, but analysts are seeking hints on how the Fed will unwind itself from financial markets. This year, the Fed has purchased nearly every mortgage-backed security on the market. If the Fed hints it will begin slowing those purchases, we could see rates rise.
However, if the Fed offers no hints, we may see some flattening pressure on rates, even with good economic news.