MARKET COMMENT
Mortgage bond prices finished the week near unchanged which kept rates in check. Rates started slightly better Monday and Tuesday morning amid no data. There was a selloff Tuesday afternoon which was reflected in pricing Wednesday morning. The economic releases later in the week were mixed. The FHFA Housing price index was up 0.6% versus the expected 0.8% increase. Existing home sales were weaker than expected. Weekly jobless claims printed at 234K. Analysts expected a reading of 238K. The Treasury auctions generally showed solid demand. Durable goods orders fell 0.7%. Analysts expected a 1.8% decrease. The GDP 2nd Estimate rose 1.2% versus the expected 0.8% increase. Consumer sentiment came in at 97.1 versus the expected 97.7. Mortgage interest rates finished the week better by approximately 1/8 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Personal Income and Outlays | Tuesday, May 30, 8:30 am, et |
Up 0.3%, Up 0.1% |
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
| PCE Core Inflation | Tuesday, May 30, 8:30 am, et |
Up 0.1% | Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve. |
| Consumer Confidence | Tuesday, May 30, 10:00 am, et |
120.4 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| Fed “Beige Book” | Wednesday, May 31, 2:00 pm, et |
None | Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates. |
| ADP Employment | Thursday, June 1, 8:30 am, et |
188K | Important. An indication of employment. Weakness may bring lower rates. |
| Weekly Jobless Claims | Thursday, June 1, 8:30 am, et |
235K | Important. An indication of employment. Higher claims may result in lower rates. |
| Revised Q1 Productivity | Thursday, June 1, 8:30 am, et |
Up 0.1% | Important. A measure of output per hour. Improvement may lead to lower mortgage rates. |
| ISM Index | Thursday, June 1, 10:00 am, et |
55 | Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates. |
| Employment | Friday, June 2, 8:30 am, et |
4.4%, Payrolls +195K |
Very important. An increase in unemployment or weakness in payrolls may bring lower rates. |
| Trade Data | Friday, June 2, 8:30 am, et |
$44.2B deficit | Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates. |
CORE PCE INFLATION DATA
The US Department of Commerce’s Bureau of Economic Analysis releases the core PCE price index. The report provides the average increase in costs for personal consumption expenditures. PCE is significant in that the Fed uses it in determining inflation as opposed to the prior use of the consumer price index. The PCE includes the price of spending for and on behalf of households. This includes health care spending paid for a household by a business. The CPI only reflects out of pocket expenses paid directly by consumers.
