MARKET COMMENT
Mortgage bond prices finished the week near unchanged despite significant volatility. Rates fell Tuesday after the DOW got crushed and closed down 1150 points. The U.S. ran a trade deficit of $53.1B which was near expectations. Rates shot higher Thursday morning in response to stronger employment data. Weekly jobless claims printed at 221K and continuing claims, a summation of all receiving benefits, at 1923K. Claims were expected at 234K and continuing claims at 1,934K. This was further proof of a tight labor market. Employers are going to have to increase wages to attract good employees. The DOW closed down 1033 points Thursday afternoon and rates recovered some of the earlier losses. We ended the week unchanged to worse by approximately 1/4 of a discount point even with the large swings.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Consumer Price Index | Wednesday, Feb. 14, 8:30 am, et | Up 0.2%, Core up 0.3% | Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates. |
| Retail Sales | Wednesday, Feb. 14, 8:30 am, et | Up 0.7% | Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates. |
| Producer Price Index | Thursday, Feb. 15, 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. |
| Weekly Jobless Claims | Thursday, Feb. 15, 8:30 am, et | 222K | Important. An indication of employment. Higher claims may result in lower rates. |
| Industrial Production | Thursday, Feb. 15, 9:15 am, et | Up 0.8% | Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates. |
| Capacity Utilization | Thursday, Feb. 15, 9:15 am, et | 78% | Important. A figure above 85% is viewed as inflationary. Weaker figure may lead to lower rates. |
| Philadelphia Fed Survey | Thursday, Feb. 15, 10:00 am, et | 22 | Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates. |
| NAHB Housing Index | Thursday, Feb. 15, 10:00 am, et | 73 | Moderately Important. A measure of single family housing. Weakness may lead to lower mortgage rates. |
| Housing Starts | Friday, Feb. 16, 8:30 am, et | 1200K | Important. A measure of housing sector strength. Weakness may lead to lower rates. |
BUSY WEEK
Economic data is the number one reason mortgage interest rates move on a daily basis. Data is compiled from numerous sources and comes in two flavors, economic growth and inflation. Some releases are more important than others and thus are more likely to cause wider swings in mortgage rates. Rates move in relation to the deviation from expectations. We have significant releases starting mid-week. The potential for mortgage interest rate volatility is greater as a result. Volatility can be the enemy as we saw the beginning of this year with negative movements (higher rates) after sentiment changed on looming Fed rate hikes. Any indication of strength in the data will likely result in higher mortgage interest rates so remain cautious.
