Market Forecast: Hurricane Harvey Cleanup, Fed Beige Book, Mortgage Applications
Last week, Hurricane Harvey caused major damage across the Gulf Coast. Southeastern Texas and the Houston metro area suffered heavy flooding and parts of the region are still underwater. American Red Cross President Brad Kieserman expects cleanup to last through December. Markets are closed today in observance of Labor Day.
On Tuesday, the Federal Reserve will release its Beige Book, two weeks ahead of the September policy meeting. This economic report is used to predict what the Federal Open Market Committee (FOMC) will discuss at the policy meeting. Inflation has been tepid, but last week’s GDP report showed consumer spending is starting to pick back up.
The Mortgage Bankers Association (MBA) mortgage application survey tracks changes in new purchase and refinance mortgage applications. For the week ending 9/1, both segments of the index declined for a composite decrease of 2.3%. Refinance applications were down 2.0% and new purchase applications were down 3.0%.
Many analysts are pushing back rate hike projections to December. The August jobs report was not as strong as expected and inflation has failed to meet the targeted range. Following the Hurricane Harvey natural disaster, the CME Group’s FedWatch tool is predicting only a 36% chance of a rate hike in December.
Sources: Bloomberg, MarketWatch, MarketWatch, Mortgage News Daily