|
Market Comment
Mortgage bond prices fell last week pushing mortgage interest rates higher. Trading was positive for the week through Wednesday's close. The data generally was benign causing no large mortgage bond market swings. Unfortunately a strong 273-point jump in the DOW Thursday resulted in mortgage rates worsening by about 3/8 of a discount point that afternoon. Fortunately bond prices recovered some Friday, as the stocks were unable to hold those gains. Rates rose by about 1/8 of a discount point for the week.
The producer and consumer price index data will be the most important releases this week. If inflation remains tame mortgage interest rates may improve. Expect global economies to continue to factor into trading.
LOOKING AHEAD
|
Economic
Indicator
|
Release
Date & Time
|
Consensus
Estimate
|
Analysis
|
| Housing Starts |
Wednesday, June 16,
8:30 am, et
|
Down 2.5% |
Important. A measure of housing sector strength. Larger than expected decreases may lead to lower rates. |
| Producer Price Index |
Wednesday, June 16,
8:30 am, et
|
Down 0.4%,
Core up 0.1%
|
Important. An indication of inflationary pressures at the producer level. Lower figures may lead to lower rates. |
| Industrial Production |
Wednesday, June 16,
9:15 am, et
|
Up 0.7% |
Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates. |
| Capacity Utilization |
Wednesday, June 16,
9:15 am, et
|
74.2% |
Important. A figure above 85% is viewed as inflationary. A decrease may lead to lower rates. |
| Weekly Jobless Claims |
Thursday, June 17,
8:30 am, et
|
450K |
Important. An indication of US employment situation. A higher figure should help rates. |
| Consumer Price Index |
Thursday, June 17,
8:30 am, et
|
Down 0.1%
Core up 0.1%
|
Important. A measure of inflation at the consumer level. Lower figures may lead to lower rates. |
| Leading Economic Indicators |
Thursday, June 17,
10:00 am, et
|
Up 0.4% |
Important. An indication of future economic activity. A smaller increase may lead to lower rates. |
| Philadelphia Fed Survey |
Thursday, June 17,
10:00 am, et
|
17.0 |
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates. |
Industrial Production
The Federal Reserve releases the Industrial Production report each month. It is a real measure of output from manufacturing, mining, electric, and gas utilities. The data is significant in that it provides an indicator of the state of the economy. Analysts use the data to attempt to determine market direction. The Fed uses the data to help set the course for monetary policy. Generally the Fed likes to see steady growth in the economy with little price pressures.
Mortgage interest rates generally react favorably to weaker than expected industrial production data. In times of economic weakness investors often move out of stocks and into mortgage bonds. When things look good investors often move out of bonds and back into stocks. We have seen these patterns frequently in recent months.
Floating into significant economic data always has some risk involved but the last release came in as expected and didn't move the market much. Nonetheless, now is a great time to take advantage of mortgage interest rates at these historically low levels to avoid future market volatility.
|
