Posted by: cfigueira | August 30, 2010

Mortgage Industry News

Key Economic News:

Personal income andspending, Dallas Fed survey, and a Fed speech…

8:30: Personal income and outlays for July…small incease all around? The anemic jobs report for July suggest only a small gain in personal income, while retail and auto sales data imply a similar outcome for spending. We expect the PCE core index to rise 0.13% on the back of a similar increase in the core CPI.
On income, median forecast (of 62): +0.3%, ranging from +0.1% to +0.6%; last flat.
On spending, median forecast (of 67): +0.3%, ranging from flat to +0.5%; last flat.
On PCE core index, median forecast (of 46): +0.1%, ranging from flat to +0.3%; last +0.04%.

10:30: Dallas Fed manufacturing index for Aug…will it recover some of that disastrous setback? The headline index in this survey has overshot on the weak side the setbacks in orders and shipments. Analysts therefore expect a modest rebound, but still to a level that implies contraction in the sector.
Median forecast (of 4): -16%, ranging from -28% to -10%; last -21.0%.

13:30: St. Louis Federal Reserve President James Bullard speaks…at a conference on financial reform sponsored by the St. Louis Fed and the National Association of Business Economists, in St. Louis. Mr Ballard is currently a voting member of the FOMC.

Advice:

Slightly better than expected
Personal income and spending rise modestly in July, slightly ahead of expectations in the case of consumption. Core price inflation remains subdued.

Key Numbers:
Consumer spending +0.4% in July (mom, +3.4% yoy) vs. median forecast +0.3%.
Personal income +0.2% in July (mom, +3.0 yoy) vs. median forecast +0.3%.
Core PCE price index +0.11% in July (mom, +1.38% yoy) vs. median forecast +0.1%.

With personal income and spending coming in a little better than expected, and the Dallas Fed manufacturing expected to have a small bounce. We might see some selling, but this could be offset by traders re-opening thier long positions they sold on Friday. The only way I can see for the market to really rally is if the government decides to have another round of stimulus packages.

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