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FOMC Meeting Looms Large This Week

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FOMC meeting will be the highlight of the week

We’ll have a few real estate–related economic releases this week, but nothing too major. The S&P Case-Shiller House Price index should show real estate prices continue to climb in the mid-single-digit percentage range. New home sales will also be important. However, with housing starts stuck around the 1.2 million unit level for the past year, the number should be in line with prior numbers.

The FOMC (Federal Open Market Committee) meets on Tuesday and Wednesday. Two weeks ago, the meeting was considered to be a non-event, but the market has been raising its estimates for the federal funds rate by the end of the year.

Finally, earnings season is in full swing. We’ll hear from mortgage REIT giant American Capital Agency (AGNC).

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Economic data this week

Below is a summary of this week’s economic data.

Monday, July 25:

  • Dallas Fed Manufacturing Survey

Tuesday, July 26:

  • S&P Case-Shiller index
  • new home sales
  • consumer confidence
  • Richmond Fed Manufacturing Index

Wednesday, July 27:

  • Mortgage Bankers Association mortgage applications
  • durable goods orders
  • pending home sales
  • FOMC meeting announcement

Thursday, July 28:

  • initial jobless claims
  • Bloomberg Consumer Comfort Index
  • Kansas City Fed Manufacturing Index

Friday, July 29:

  • 2Q16 GDP (advance estimate)
  • employment cost index
  • Chicago purchasing managers index
  • consumer sentiment

Earnings this week:

Wednesday, July 27:

Thursday, July 28

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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. That means it will all rest on the FOMC’s decision. Mortgage REITs will also be watching for when the Fed stops re-investing maturing quantitative easing proceeds back 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 Case-Shiller and new home sales. 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 discuss what happened last week.

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