![Mortgage Investors Group in [Dynamic1]](../assets/images/mortgage-investors-group.svg)
Market Comment
Mortgage bond prices finished the week slightly higher which pushed rates lower. Rates seesawed back and forth throughout the week within a relatively narrow range. The Institute for Supply Management (ISM), an indication of the health of the manufacturing sector, printed at 50.8, weaker than the 51.4 that was expected. The ADP employment data showed an increase of 156K jobs in April. This was lower than the 186K expected increase. Productivity fell 1% and labor costs increased 4.1%. Analysts expected an increase of 2.6%. Weekly jobless claims were higher than expected at 274K versus 259K. Unemployment stayed at 5%. Non-farm payrolls rose 160K versus the expected 200K increase. Mortgage interest rates finished the week better by approximately 1/8 to 1/4 of a discount point.
Looking Ahead
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| 3-year Treasury Note Auction | Tuesday, May 10, 11:15 pm, et | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| 10-year Treasury Note Auction | Wednesday, May 11, 1:15 pm, et | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Weekly Jobless Claims | Thursday, May 12, 8:30 am, et | 272K | Important. An indication of employment. Higher claims may result in lower rates. |
| 30-year Treasury Bond Auction | Thursday, May 12, 1:15 pm, et | None | Important. Bonds will be auctioned. Strong demand may lead to lower mortgage rates. |
| Producer Price Index | Friday, May 13, 8:30 am, et | Up 0.1%, Core up 0.1% | Important. An indication of inflationary pressures at the producer level. Lower figures may lead to lower rates. |
| Retail Sales | Friday, May 13, 8:30 am, et | Down 0.2% | Important. A measure of consumer demand. Weakness may lead to lower mortgage rates. |
| Business Inventories | Friday, May 13, 10:00 am, et | Up 0.2% | Low importance. An indication of stored-up capacity. A significantly larger increase may lead to lower rates. |
| U of Michigan Consumer Sentiment | Friday, May 13, 10:00 am, et | 89.6 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
Labor Costs Higher
According to the Bureau of Labor Statistics Nonfarm business sector labor productivity decreased at a 1.0 percent annual rate during the first quarter of 2016 as output increased 0.4 percent and hours worked increased 1.5 percent. From the first quarter of 2015 to the first quarter of 2016, productivity increased 0.6 percent. Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked of all persons, including employees, proprietors, and unpaid family workers.Unit labor costs in the nonfarm business sector increased 4.1 percent in the first quarter of 2016, which reflected a 3.0 percent increase in hourly compensation and a 1.0 percent decrease in productivity. Unit labor costs increased 2.3 percent over the last four quarters.BLS calculates unit labor costs as the ratio of hourly compensation to labor productivity. Increases in hourly compensation tend to increase unit labor costs, and increases in output per hour tend to reduce them.
