GDP will be the number to focus on
We don’t have much in the way of important economic data this week, aside from the second revision to 1Q16 GDP on Friday. Wall Street is forecasting the number to come in at 0.9%. Aside from GDP, we’ll get data on durable goods, new home sales, home prices, and pending home sales.
Economic data this week
Below is a rundown of this week’s economic data:
Monday, May 23:
- Markit US Manufacturing PMI (purchasing managers’ index)
Tuesday, May 24:
- Richmond Fed (Federal Reserve) data
- new home sales
Wednesday, May 25:
- MBA (Mortgage Bankers Association) mortgage applications
- FHFA (Federal Housing Finance Agency) House Price Index
- Markit US Services PMI
- Markit US Composite PMI
Thursday, May 26:
- initial jobless claims
- Bloomberg Consumer Comfort Index
- durable goods
- capital goods
- pending home sales
- Kansas City Fed data
Friday, May 27:
- 1Q16 GDP (second revision)
- personal consumption
- University of Michigan Consumer Sentiment Index
Earnings this week
On the earnings front, we’ll get a read on the luxury end of the housing market when Toll Brothers (TOL) reports its results on Tuesday, May 24.
Implications for mortgage REITs
REITs such as Annaly Capital Management (NLY) and American Capital Agency (AGNC) will likely focus on data that will move the bond market. The most likely bond-moving report will be GDP, especially the personal consumption data. Right now, all economic data will be viewed through the prism of the June FOMC (Federal Open Market Committee) meeting. Investors who want to bet on interest rates can look at the iShares 20+ Year Treasury Bond ETF (TLT).
Impact on homebuilders
Homebuilders such as PulteGroup (PHM) and CalAtlantic Group (CAA) will pay the most attention to new home sales and the numbers out of Toll Brothers. The seasonal uptick for the homebuilding sector is in full swing. Investors will be waiting to hear about traffic patterns. Investors can get access to the homebuilding sector through the SPDR S&P Homebuilders ETF (XHB).
In the next part of this series, we’ll look at last week’s developments in more detail.