MARKET COMMENT
Mortgage bond prices finished the week slightly higher which helped rates improve a little. Rates were lower Monday and Tuesday amid continued Greek debt concerns out of the Eurozone. The United States ran a trade deficit of $44.3B in December. Weekly jobless claims printed at 234K and continuing claims, a summation of all receiving benefits, at 2,078K. Expectations were for claims at 246K and continuing claims at 2,046K. Weekly jobless claims sat near a 43-year low. The Treasury auction of $15B of 30-year bonds was mixed. The bid to cover, an indication of overall demand, was 2.25 bids for each $1 at auction versus the average of 2.3. The indirect bid, an indication of foreign demand, was 66% versus the average of 62%. Mortgage interest rates finished the week lower by about 1/4 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Producer Price Index | Tuesday, Feb. 14, 8:30 am, et |
Up 0.4%, Core up 0.2% |
Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates. |
| Consumer Price Index | Wednesday, Feb. 15, 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. |
| Retail Sales | Wednesday, Feb. 15, 8:30 am, et |
Up 1.2% | Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates. |
| Industrial Production | Wednesday, Feb. 15, 9:15 am, et |
Up 0.6% | Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates. |
| Capacity Utilization | Wednesday, Feb. 15, 9:15 am, et |
75.4% | Important. A figure above 85% is viewed as inflationary. Weaker figure may lead to lower rates. |
| Weekly Jobless Claims | Thursday, Feb. 16, 8:30 am, et |
235K | Important. An indication of employment. Higher claims may result in lower rates. |
| Housing Starts | Thursday, Feb. 16, 8:30 am, et |
1225K | Important. A measure of housing sector strength. Weakness may lead to lower rates. |
| Philadelphia Fed Survey | Thursday, Feb. 16, 10:00 am, et |
15.8 | Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates. |
| Leading Economic Indicators | Friday, Feb. 17, 10:00 am, et |
Up 0.5% | Important. An indication of future economic activity. A smaller increase may lead to lower rates. |
FED MAKEUP
The makeup of the Fed changed this year which brings less PhD economists and more with real world experience. The FOMC has 12 voting members. Seven members form the board of governors based in Washington. The New York Fed chief and the board of governors have permanent spots. The other four votes come on a rotational basis from the 11 regional Fed presidents. This year three of the four new votes will come from Fed presidents that are not economists. They have varied backgrounds from banking, engineering and academia.
It will be interesting to see the relationship between the Fed and President Trump going forward. Analysts are concerned there could be friction. Uncertainty often results in market volatility. Take advantage of low rates now.
