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FOMC Meeting Is the Highlight of the Week Ahead

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FOMC decision will be the highlight of the week

This week contains some important data with housing starts, industrial production, and retail sales. However, the highlight will be the FOMC (Federal Open Market Committee) meeting on Tuesday and Wednesday. The Fed set up markets for a June rate hike, but pulled back after the May jobs report showed a slowdown in hiring. Note that this meeting will contain updated economic projections and Fed Chair Janet Yellen will hold a press conference.

There aren’t any earnings this week, but we’ll hear from homebuilders Lennar (LEN) and KB Home (KBH) the week after.

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Economic data this week

Monday, June 13:

  • No economic data

Tuesday, June 14:

  • NFIB Small Business Optimism
  • import prices
  • retail sales
  • business inventories

Wednesday, June 15:

  • Mortgage Bankers Association mortgage applications
  • Producer Price Index
  • Empire Manufacturing
  • industrial production
  • capacity utilization
  • manufacturing production
  • FOMC rate decision
  • TIC flows

Thursday, June 16:

  • initial jobless claims
  • Bloomberg consumer comfort index
  • Philly Fed
  • consumer price index
  • NAHB Housing Market Index

Friday, June 17:

  • housing starts
  • building permits

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 FOMC decision will be the catalyst to move bonds, although no move appears to be priced into the market. 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 housing starts and building permits. The seasonal uptick for the homebuilding sector is in full swing. 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.

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