MARKET COMMENT
Mortgage bond prices finished the week near unchanged which held rates in check. Rates were higher Tuesday after the extended holiday weekend. Selling pressure tied to strength in the recent employment report set the tone for trading early in the week. Producer prices rose 0.2% as expected. The core, which excludes volatile food and energy, rose 0.2% as expected. Consumer prices rose 0.1% versus the expected 0.2% increase. The core rose 0.1% versus the expected 0.2% increase. Weekly jobless claims were 214K versus the expected 205K. The 3Y and 10Y auctions were weaker than average. The 30Y auction showed solid foreign demand. Consumer sentiment was a lower than expected 99. Mortgage interest rates finished the week with discount points near unchanged.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Retail Sales | Monday, Oct. 15, 8:30 am, et | Up 0.3% | Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates. |
| Industrial Production | Tuesday, Oct. 16, 9:15 am, et | Up 0.2% | Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates. |
| Capacity Utilization | Tuesday, Oct. 16, 9:15 am, et | 78.3% | Important. A figure above 85% is viewed as inflationary. Weaker figure may lead to lower rates. |
| NAHB Housing Index | Tuesday, Oct. 16, 10:00 am, et | 67 | Moderately Important. A measure of single family housing. Weakness may lead to lower mortgage rates. |
| Housing Starts | Wednesday, Oct. 17, 8:30 am, et | 1285K | Important. A measure of housing sector strength. Weakness may lead to lower rates. |
| Fed Minutes | Wednesday, Oct. 17, 2:00 pm, et | None | Important. Details of the last Fed meeting will be thoroughly analyzed. |
| Weekly Jobless Claims | Thursday, Oct. 18, 8:30 am, et | 212K | Important. An indication of employment. Higher claims may result in lower rates. |
| Philadelphia Fed Survey | Thursday, Oct. 18, 10:00 am, et | 23 | Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates. |
| Leading Economic Indicators | Thursday, Oct. 18, 10:00 am, et | Up 0.2% | Important. An indication of future economic activity. A smaller increase may lead to lower rates. |
| Existing Home Sales | Friday, Oct. 19, 10:00 am, et | 5.33M | Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates. |
STOCK JOLT
The stock market got clobbered last week and the upward pressure on mortgage interest rates was temporarily halted. The DOW closed down 56 points Tuesday, 832 points Wednesday, and 546 points Thursday. While many traders moved to the sidelines there was some MBS buying late Wednesday and Thursday amid the stock weakness. The halt in escalating rates is likely to be temporary as the Fed is clear they will continue down the rate hike path. Now is a great time to take advantage of mortgage interest rates at these levels.
