MARKET COMMENT
Mortgage bond prices finished the week near unchanged which kept rates steady. Rates started the week lower Monday morning but the improvements were erased by Thursday. The NAHB Housing Market Index printed at 68 versus the expected 70. The index is based on a monthly survey of members belonging to the National Association of Homebuilders (NAHB) is designed to measure sentiment for the U.S. single-family housing market. Weekly jobless claims were near expectations. Leading economic indicators rose 0.4% versus the expected 0.3% increase. The Philadelphia Fed survey showed strong economic activity in the Mid-Atlantic region. Mortgage interest rates finished the week unchanged to better by approximately 1/8 of discount point despite some volatility.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| FHFA House Price Index | Tuesday, April 25, 10:00 am, et |
Up 0.4% | Moderately Important. A measure of single family house prices. Weakness may lead to lower rates. |
| New Home Sales | Tuesday, April 25, 10:00 am, et |
600K | Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
| Consumer Confidence | Tuesday, April 25, 10:00 am, et |
126 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| Treasury Auctions Begin | Tuesday, April 25, 10:00 am, et |
None | Important. 2Y Notes on Tuesday, 5Y Notes on Wednesday, and 7Y Notes on Thursday. |
| Durable Goods Orders | Thursday, April 27, 8:30 am, et |
Up 1.8% | Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates. |
| Weekly Jobless Claims | Thursday, April 27, 8:30 am, et |
240K | Important. An indication of employment. Higher claims may result in lower rates. |
| Q1 Advance GDP | Friday, April 28, 8:30 am, et |
Up 2.1% | Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| Q1 Employment Cost Index | Friday, April 28, 8:30 am, et |
Up 0.5% | Very important. A measure of wage inflation. Weakness may lead to lower rates. |
| U of Michigan Consumer Sentiment | Friday, April 28, 10:00 am, et |
98.2 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
EMPLOYMENT COST INDEX
The employment cost index is a quarterly report issued by the Department of Labor. The report measures the growth of wages, salaries, and benefits costs over a certain period of time. Though ECI figures are usually weeks old, the data remains the best indicator of employment price pressures considering it factors employees’ total compensation.
If wage pressures become evident, higher expectations of inflation also tend to arise. However, increasing compensation does not necessarily lead to increased inflationary pressures. Oftentimes, increased productivity enables employers to increase compensation without increasing the costs of their goods or services. Be cautious heading into this release.
