Updated on September 27, 2021 10:09:01 AM EDT

Kicking off this week’s economic calendar was the highly important August Durable Goods Orders report at 10:00 AM ET. It showed a 1.8% rise in new orders at U.S. factories for big-ticket products. This was a larger increase than analysts were expecting, hinting at manufacturing sector strength. However, a secondary reading within the report that excludes more costly and volatile orders for airplanes and related products came in weaker than forecasts. That allows us to consider the data neutral to slightly negative for rates.

We also have the first of this weeks two potentially influential Treasury auctions taking place today. The Treasury is selling 5-year Notes today and 7-year Notes tomorrow. They will tell us if there is an appetite in the markets for medium-term securities. If investor demand in these sales is strong, particularly from international buyers, the broader bond market should move higher, pushing mortgage rates lower. But a lackluster interest from investors could lead to bond selling and higher mortgage pricing. The results of the sales will be announced at 1:00 PM ET each day, so any reaction will come during afternoon trading today and/or tomorrow.

Tomorrow’s sole economic report is Septembers Consumer Confidence Index (CCI) at 10:00 AM ET. This Conference Board index gives us a measurement of consumer willingness to spend. It is expected to show a rise in confidence from Augusts reading, indicating that consumers were more optimistic about their own financial situations than last month. This means they are more likely to make a large purchase in the near future. Because consumer spending makes up almost 70% of the U.S. economy, good news for rates would be a decline. Analysts are calling for a reading of approximately 114.4, up from Augusts 113.8. The smaller the reading, the better the news for the bond market and mortgage rates.

Overall, Friday is the most important day of the week due to the significance of the three economic reports being released, assuming the budget and debt ceiling issues in Washington D.C. get worked out. The best candidate for calmest day is Wednesday. We have plenty scheduled this week that is expected to affect rates. We need to see weaker results in this week’s big reports for bond yields and mortgage rates to recover last week’s losses.

 ©Mortgage Commentary 2021