President Trump’s comments on the events in Charlottesville had a significant, ripple-like effect which ultimately reached financial markets. Talk of the loss of support from business leaders and political allies, as well as the resignation of the Chief Economic Advisor, led to feelings of despair in investors; who expected pro-growth legislation in the near future. While This meant bad news for stocks, prospects of future inflation declined; lack of inflation means healthy mortgage rates. Yet, reports outlining the Trump administration and major Republicans in Congress’, progress on tax reform caused a change in attitude. The reforms will prove beneficial for businesses and are assumed to promote economic growth.
Following the announcements, stocks prospered as mortgages rates rose. Once again, attitudes shifted as Wednesday brought Trump’s statements involving the possible end of NAFTA. This is expected to hold back global growth, meaning a fall in mortgage rates.
Wednesday’s data on the sale of newly built homes proved discouraging. New home sales declined 9% from June to July (safely below expected levels). However, June’s results were rounded up, which may account for a deficit in July’s results. The report has a tendency to be unstable from month to month.
In the week ahead, investors will study any developments concerning Trump’s administration. Thursday will bring the release of the Existing Home Sales report. Friday will bring the Durable Goods report, a significant gauge of economic activity. The primary revisions to second quarter GDP (“Gross Domestic Product), the most generous measure of economic activity, is to be released August 30th.
September 1st brings the release of the following Employment Report. Additionally, the global central bankers are expected to attend the annual Jackson Hole conference, from Thursday to Saturday. Any comments concerning future monetary policy have the potential to affect mortgage rates.
The Chernov Team takes pride in keeping their clients informed, with up-to-date information on the housing market. As interest rates go down, as they are expected to, new home sales will go up; making it the perfect time to sell. Most indications suggest that this will occur soon. With mortgage rates decreasing, it is becoming a seller’s market; don’t let an opportunity get away!