US MBA Mortgage Applications (Aug/07) 3.6% (Prev. -2.9%)

A swing from contraction to expansion of this size is entirely within the normal range for this weekly series, which is among the noisiest in the US calendar and routinely reverses sign from one print to the next. The distinction that matters is between the purchase and refinancing components: refi demand is highly rate-elastic and tends to drive the headline swings when mortgage rates move, while the purchase index is the cleaner read on underlying housing demand. Single prints rarely move rates or equities; the series matters only in aggregate, where a sustained run of weak purchase applications has historically fed into the housing starts and existing home sales data that follow with a lag. The more durable signal comes from the four-week trend rather than any one observation, and from whether applications are responding to a move in mortgage rates or diverging from them. Next points of relevance are the coming week's print for confirmation and the scheduled housing releases for corroboration.