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Volatile Week For The Market & Interest Rates

Volatile Week For The Market & Interest Rates

Over the past week, mortgage interest rates were pushed and pulled by unusually large movements in global stock markets. The economic data had little impact. After a volatile week, mortgage rates ended just a little higher.

Concerns about slowing global economic growth, particularly in China, caused the U.S. stock market to decline sharply early in the week. However, with stocks at much lower prices, buyers stepped in later in the week, erasing the week’s earlier losses. While the magnitude of the moves were relatively smaller, a similar pattern was seen in mortgage rates. They dropped early in the week and then gave back their improvement later in the week. This relationship between stocks and mortgage rates is common, as investors shift assets between stocks and bonds. 

The recent revisions to U.S. Gross Domestic Product, the broadest measure of economic activity, revealed an increase in growth during the second quarter to 3.7% from an original estimate of 2.3%. This follows a much smaller gain of 0.6% during the first quarter. One factor behind the improved performance during the second quarter was a significant increase in inventories. This is unlikely to continue next quarter, however, and early forecasts for the third quarter are for growth below 2.0%.




Next week, the important monthly Employment report will be released on Friday. As usual, this data on the number of jobs, the Unemployment Rate, and wage inflation will be the most highly anticipated economic data of the month. Before that, ISM Manufacturing will be released on Tuesday. The ADP Employment Change will come out on Wednesday. ISM Services will be released on Thursday. In addition, there will be a European Central Bank (ECB) meeting on Thursday at which some investors expect ECB officials to discuss a possible need for additional stimulus.

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