MARKET COMMENT
Mortgage bond prices finished the week lower which pushed rates slightly higher. Rates were stable the early portion of the week amid no data. The National Federation of Independent Business reported that the Small Business Optimism Index jumped by the most since the survey began. Foreign appetite for US debt remained strong. Foreign central banks purchased an above average amount of 10-year notes Wednesday. Weekly jobless claims printed at 247K versus the expected 255K level. Higher than expected inflation data put upward pressure on rates Friday morning. Producer prices rose 0.3% and the core value, which excludes volatile food and energy components, rose 0.2%. Economists expected PPI to rise 0.3% and the core to rise 0.1%. Mortgage interest rates finished the week higher by about 1/8 to 1/4 of a discount point despite the up and down movements.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Consumer Price Index | Wednesday, Jan. 18, 8:30 am, et | Up 0.2%, Core up 0.2% | Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates. |
| Industrial Production | Wednesday, Jan. 18, 9:15 am, et | Up 0.4% | Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates. |
| Capacity Utilization | Wednesday, Jan. 18, 9:15 am, et | 75.3% | Important. A figure above 85% is viewed as inflationary. Weaker figure may lead to lower rates. |
| NAHB Housing Index | Wednesday, Jan. 18, 10:00 am, et | 71 | Moderately Important. A measure of single family housing. Weakness may lead to lower mortgage rates. |
| Fed “Beige Book” | Wednesday, Jan. 18, 2:00 pm, et | None | Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates. |
| Housing Starts | Thursday, Jan. 19, 8:30 am, et | 1100K | Important. A measure of housing sector strength. Weakness may lead to lower rates. |
| Weekly Jobless Claims | Thursday, Jan. 19, 8:30 am, et | 250K | Important. An indication of employment. Higher claims may result in lower rates. |
| Philadelphia Fed Survey | Thursday, Jan. 19, 10:00 am, et | 10.9 | Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates. |
NAHB Index
The National Association of Home Builders (NAHB) releases the Housing Market Index each month which provides an indication of single family housing market conditions. The results are derived from a survey of NAHB members in which members are asked to rate current market conditions, future market conditions, and prospective buyer traffic. The data is compiled and then a final number between 0 and 100 is released. A reading over 50 is generally considered positive. The data often correlates with the housing starts data. The release this week may provide an early indicator to the housing starts figure Thursday assuming the two reports are in line this month.
Mortgage interest rates remain historically favorable despite some recent volatility. There are no guarantees these rates will last forever so a cautious approach to float and lock decisions is wise.
