MARKET COMMENT
Mortgage bond prices finished the week slightly lower which put a little upward pressure on rates. Rates were higher Monday as a Fed official primed the markets for future rate hikes. Philadelphia Fed President Harker stated that he is confident inflation will hit 2% by the end of the year. Rates were slightly better Tuesday as stocks struggled and China reported increasing their U.S. debt holdings. This reversed a little mid-week as stocks rebounded and growth estimates from the Eurozone where revised higher. There were few data releases. Factory orders fell 0.2% as expected. Weekly jobless claims were 245K versus the expected 240K. Most of the movement this week took place in the mornings with very quiet afternoon sessions. There were some seesaw discount point changes but we ended the week near neutral to worse by approximately 1/8 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Producer Price Index | Tuesday, June 13, 8:30 am, et | Up 0.4%, Core up 0.3% | Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates. |
| Retail Sales | Wednesday, June 14, 8:30 am, et | Up 1.1% | Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates. |
| Consumer Price Index | Wednesday, June 14, 8:30 am, et | Up 0.2%, Core up 0.1% | Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates. |
| Fed Meeting Adjourns | Wednesday, June 14, 2:15 pm, et | Rate Hike Expected | Important. Most expect the Fed to change rates. Volatility may surround the adjournment of this meeting. |
| Industrial Production | Thursday, June 15, 9:15 am, et | Up 0.8% | Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates. |
| Capacity Utilization | Thursday, June 15, 9:15 am, et | 76.7% | Important. A figure above 85% is viewed as inflationary. Weaker figure may lead to lower rates. |
| Philadelphia Fed Survey | Thursday, June 15, 10:00 am, et | 39 | Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates. |
| U of Michigan Consumer Sentiment | Friday, June 16, 10:00 am, et | 97.5 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
RETAIL SALES
Retail sales data is the first indication of weakness or strength in consumer spending released each month. The Bureau of the Census of the US Department of Commerce provides information on how much the consumer spends on the purchase of goods. This data provides the consumption part of the gross domestic product. Retail sales data represents merchandise sold for cash or credit by retailers. Durable goods, such as autos, make up 35% of the figure. The balance consists of non-durables such as gasoline, restaurants, and general merchandise. There are several drawbacks to the report. The data covers purchases of goods only, not services. It is also not adjusted for inflation and is extremely volatile. Economists are concerned that the current economic uncertainty will curtail consumer spending.
