Forecast for the Week 09/21/2009

This week is chock full of economic news for the market to digest. First, we'll hear from the Fed with the Federal Open Market Committee (FOMC) policy statement and interest rate decision to be released after their upcoming meeting ends on Wednesday. Although the Fed hasn't made any policy changes as of late, the Fed's statements are still closely watched by the markets for any comments or concerns on matters such as inflation.

Considering last week's news that Housing Starts for August came in better than expected and at the highest level since last November, we'll gain more insight on the health of the housing industry when reports on Existing Home Sales and New Home Sales for August are released on Thursday and Friday respectively.

Also on tap this Friday is the Durable Goods Orders report. Durable Goods Orders are considered a leading indicator of manufacturing activity, and the market often moves on this report. However, the volatility and large revisions that are sometimes made to past reports make this a less-than-perfect indicator.

Finally, we'll see the Consumer Sentiment Index for September this Friday. Although consumer sentiment does not correlate strongly with consumer spending, the markets will be watching to see if this month's reading hits expectations of 70.0.

Mixed in with these reports will be another round of 2-year, 5-year, and 7-year Note auctions. Recent auctions have been fairly well received and have helped support Bond prices, so I'll be watching closely to see if this trend can continue this week, or if Bond prices and home loan rates will worsen in response to the enormous supply hitting the market.
Thanks!....Tom
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