Looking Back
Interest rates shot up last week as the bond market suffered through a resurgence in the stock market and escalating fears of unchecked inflation. Bonds are seen as a safe haven in times of economic uncertainty, and investors often shift assets depending on where sentiment lies. Bonds and mortgage interest rates tend to track in the same direction.
In other news, the U.S. economic downturn gained steam Tuesday with a report of the highest inflation since the early 1980s.
Looking Forward
The most important financial data this week will be Fed Beige Book report on Wednesday which gives us a glimpse of the economic condition of the economy.
Other economic releases this week of interest will be Initial Home Sales on Thursday, and New Home Sales on Friday.
How do New Home Sales Influence the Economy?
New home sales data is compiled from builders across the US and divided into four geographic regions: the Northeast, the South, the Midwest, and the West. Information on the average price of a home, the number of homes for sale, and the supply of unsold homes are also provided.
The data is an indicator because it shows any strengths or weaknesses in the housing sector. More importantly, housing sector data is important because when consumer spending changes, it appears in this sector first. Consequently, a chain reaction typically occurs. A slowdown in new home sales tends to a slowdown in housing starts, which will continue to affect the economy possibly resulting in a recession.
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Lew Corcoran |
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