Quiet Week between the Jobs Report and FOMC Meeting

Light week coming up

The week after the jobs report usually doesn’t have much data—more or less, this week isn’t an exception. Earnings season kicks off this week, but no mortgage REITs or homebuilders are reporting yet. In terms of economic data, we don’t really have anything market-moving, although we will have Fed-speak pretty much every day. Friday will be the heaviest day data-wise, with industrial production and retail sales and inflation data.

Quiet Week between the Jobs Report and FOMC Meeting

Economic data this week

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

Tuesday, July 11:

  • Labor Markets Conditions Index

Tuesday, July 12:

  • NFIB Small Business Optimism

Wednesday, July 13:

  • Mortgage Bankers Association mortgage applications
  • import prices

Thursday, July 14:

  • initial jobless claims
  • Bloomberg Consumer Comfort Index
  • producer price index

Friday, July 15:

  • consumer price index
  • retail sales
  • Empire State Manufacturing Survey
  • industrial production
  • manufacturing production
  • capacity utilization
  • consumer sentiment

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. Given the new interest rate backdrop, economic data probably won’t play that big of a role in bond market movement, at least for the near term. Inflation data, as opposed to “economic strength” indicators, will probably become the most important indicators. Note that the Federal Open Market Committee will meet the week after next. 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 retail sales. For builders, the Brexit vote is generally good news. It makes homes even more affordable. 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 discuss what happened last week.