MIG Market Watch, September 18th, 2017

MARKET COMMENT
Mortgage bond prices finished the week slightly lower which pushed rates higher. Most of the losses came early in the week. The DOW was up over 200 points Monday morning after Hurricane Irma appeared to be less devastating than the initial forecasts. Producer prices rose 0.2% versus the expected 0.3% increase. The core, which excludes volatile food and energy prices, rose 0.2% as expected. Consumer prices rose 0.4% versus the expected 0.3% increase. However, the core rose 0.2% as expected. Weekly jobless claims were 284K. Analysts looked for a reading of 300K. Retail sales fell 0.2% versus the expected 0.1% increase. Consumer sentiment was 95.3 which was about as expected. Tame inflation readings and weak data late in the week stemmed some of the selling pressure. We ended the week worse by approximately 1/8 to 1/4 of a discount point.

LOOKING AHEAD

Economic Indicator Release Date & Time Consensus Estimate Analysis
NAHB Housing Ind Monday, Sept. 18,
8:30 am, et
69 Moderately Important. A measure of single family housing. Weakness may lead to lower mortgage rates.
Housing Starts Tuesday, Sept. 19,
8:30 am, et
1155K Important. A measure of housing sector strength. Weakness may lead to lower rates.
Existing Home Sales Wednesday, Sept. 20,
10:00 am, et
5.4M Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.
Fed Meeting Adjourns Wednesday, Sept. 20,
2:15 pm, et
No rate changes Important. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting.
Weekly Jobless Claims Thursday, Sept. 21,
8:30 am, et
286K Important. An indication of employment. Higher claims may result in lower rates.
Philadelphia Fed Survey Thursday, Sept. 21,
10:00 am, et
19 Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
FHFA House Price Index Thursday, Sept. 21,
10:00 am, et
Up 0.4% Moderately Important. A measure of single family house prices. Weakness may lead to lower rates.
10-year Treasury TIPS Auction Thursday, Sept. 21,
10:00 am, et
None Important. TIPS will be auctioned. Strong demand may lead to lower mortgage rates.

HOUSE PRICE INDEX
The Federal Housing Finance Agency (FHFA) was created on July 30, 2008, when the President signed into law the Housing and Economic Recovery Act of 2008. The Act gave FHFA the authorities necessary to oversee vital components of our country’s secondary mortgage markets – Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. FHFA’s mission is to provide effective supervision, regulation and housing mission oversight of Fannie Mae, Freddie Mac and the Federal Home Loan Banks to promote their safety and soundness, support housing finance and affordable housing, and support a stable and liquid mortgage market.

FHFA issues a monthly report on house prices called the House Price Index (HPI) that looks back 2 months in time. The FHFA HPI is calculated using home sales price information from mortgages sold to or guaranteed by Fannie Mae and Freddie Mac. The housing data this week will shed light on a major component of our economy. Stay alert heading into the data.

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