MARKET COMMENT
Mortgage bond prices finished the week lower which put upward pressure on rates. We started with slightly higher rates early Monday morning as global equities had a solid showing. US and China trade tensions continued to dominate headlines and swung stocks back and forth. Producer prices rose 0.3% versus the expected 0.2% increase. The core rose 0.3% which was also 0.1% higher than expected. CPI fell 0.1% versus an expected 0.1% increase. The core rose 0.2% as expected. Weekly jobless claims were 233K versus the expected 235K. The Fed Minutes from last month indicated “market participants pointed to incoming economic data released in early February–particularly data on average hourly earnings–as raising concerns about the prospects for higher inflation and higher interest rates.” We ended the week worse by 1/8 to 1/4 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Retail Sales | Monday, April 16, 8:30 am, et | Up 1.1% | Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates. |
| Business Inventories | Monday, April 16, 10:00 am, et | Up 0.4% | Low importance. An indication of stored-up capacity. A significantly larger increase may lead to lower rates. |
| NAHB Housing Index | Tuesday, April 17, 10:00 am, et | 71 | Moderately Important. A measure of single family housing. Weakness may lead to lower mortgage rates. |
| Housing Starts | Tuesday, April 17, 8:30 am, et | 1245K | Important. A measure of housing sector strength. Weakness may lead to lower rates. |
| Industrial Production | Tuesday, April 17, 9:15 am, et | Up 0.8% | Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
| Capacity Utilization | Tuesday, April 17, 9:15 am, et | 78.2% | Important. A figure above 85% is viewed as inflationary. Weakness may lead to lower rates. |
| Weekly Jobless Claims | Thursday, April 19, 8:30 am, et | 235K | Important. An indication of employment. Higher claims may result in lower rates. |
| Philadelphia Fed Survey | Thursday, April 19, 10:00 am, et | 22.4 | Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates. |
| Leading Economic Indicators | Thursday, April 19, 10:00 am, et | Up 0.4% | Important. An indication of future economic activity. A smaller increase may lead to lower rates. |
BUSINESS INVENTORIES
The report on business inventories gives a broader look at the durable goods, factory orders, and retail sales reports. Not only is this report an important part of the investment component of the GDP, but it also provides additional evidence about the economy in the upcoming months. Changes in business inventories slow as the economy approaches a peak and rise as the economy approaches the trough of a recession. Therefore the change in business inventories is a leading indicator of GDP. The data for this report, which are published by the Department of Commerce’s Census Bureau, comes from a monthly survey of inventories, orders, and manufacturers’ shipments, in addition to the merchant wholesalers and retail trade surveys.
