MARKET COMMENT
Mortgage bond prices finished the week lower which put upward pressure on rates. Rates were flat the beginning of the week but were pressured higher as stocks continued to hit record levels. Most of the data releases showed no real surprises. Industrial production rose 0.3% and capacity utilization stood at 76% which both were near expectations. The National Association of Homebuilders (NAHB) Housing Market Index printed at 68. That data was better than expected. Housing starts printed at 1,127K which was better than anticipated. Weekly jobless claims were 222K versus the expected 246K mark. The last time claims were that low was 1973. The Philadelphia Fed business index was stronger than expected while Leading Economic Indicators data was a little lower than expected. We ended the week worse by approximately 1/2 to 3/8’s of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| 2-year Treasury Note Auction | Tuesday, Oct. 24, 1:15 pm, et | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Durable Goods Orders | Wednesday, Oct. 25, 8:30 am, et | Up 1.8% | Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates. |
| New Home Sales | Wednesday, Oct. 25, 10:00 am, et | 565K | Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
| 5-year Treasury Note Auction | Wednesday, Oct. 25, 1:15 pm, et | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Weekly Jobless Claims | Thursday, Oct. 26, 8:30 am, et | 225K | Important. An indication of employment. Higher claims may result in lower rates. |
| 7-year Treasury Note Auction | Thursday, Oct. 26, 1:15 pm, et | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Q3 Advance GDP | Friday, Oct. 27, 8:30 am, et | Up 3.1% | Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| U of Michigan Consumer Sentiment | Friday, Oct. 27, 10:00 am, et | 101.2 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
NEW HOME SALES
New Home Sales data is compiled monthly by the Department of Commerce’s Census Bureau and is gathered from builders throughout the country. The data represents new home sales for the nation as well as four areas of the country: the Northeast, the Midwest, the South, and the West. Information on the average price of a home, the number of homes for sale, and the supply of unsold homes are also provided. The data is an important indicator because it shows any strength or weakness in the housing sector. The housing sector data is valuable because when consumer spending changes, it appears in this sector first. Consequently, a chain reaction typically occurs. A slowdown in new home sales tends to lead to a slowdown in housing starts, which will continue to affect other indicators possibly continuing the economic worries, as has been the recent concern of most everyone. New Home Sales data is often volatile and difficult to predict. Most analysts look at a three-month average in order to see any trends in the growth rate. The data remains significant in showing the condition of housing.
