A short week coming up
This will be a short week because markets will be closed on July 3 in observance of Independence Day. The jobs report release has been moved up to Thursday. As well, we have some important real estate–related indicators coming out this week, with pending home sales on Monday, the Case-Shiller Home Price Index on Tuesday, and construction spending on Wednesday.
The bond market—which you can trade via the iShares 20+ Year Treasury Bond ETF (TLT)—will be most sensitive to the jobs report, particularly to wage inflation. We may get some clarity with respect to the Greek situation this week, which could also push bonds around.
Economic data this week
Here’s a look at a rundown of this week’s economic data.
Monday, June 29, 2015:
- pending home sales
- the Federal Reserve Bank of Dallas
Tuesday, June 30, 2015:
- Institute for Supply Management – Milwaukee
- S&P/Case-Shiller Home Price Index
- Chicago Purchasing Manager Index
- consumer confidence
Wednesday, July 1, 2015:
- MBA (Mortgage Bankers Association) mortgage applications
- Challenger, Gray & Christmas – “Job Cut Report”
- “ADP National Employment Report”
- Markit US Manufacturing PMI
- construction spending
- ISM Manufacturing Index
Thursday, July 2, 2015:
- initial jobless claims
- Bloomberg Consumer Comfort Index
- non-farm payrolls
- unemployment rate
- average hourly earnings
- average weekly hours
- labor force participation rate
- Institute for Supply Management – New York
- factory orders
Friday, July 3, 2015:
- Markets closed
There will be no real estate–related earnings released this week.
Impact on mortgage REITs
REITs such as MFA Financial (MFA) and American Capital Agency (AGNC) are going to focus on the jobs report. While most participants didn’t expect the Fed to raise rates at the June meeting, most people are looking to the September meeting for the first rate hike. Wage growth will be the indicator to watch.
Impact on homebuilders
Builders such as D.R. Horton (DHI) and PulteGroup (PHM) will focus on pending home sales and construction spending. Lennar (LEN) reported good earnings last week. It looks like the housing sector is finally breaking out of its post-bubble slowdown.
The Case-Shiller index will also be important because increasing real estate prices will allow a higher number of previously underwater homeowners the freedom to move if they choose to. Many aging Baby Boomers are now looking to move into smaller homes.