MARKET COMMENT
Mortgage bond prices finished the week near unchanged which kept rates in check. The data was mixed. Personal income was weaker than expected while spending was higher than expected. Core PCE inflation was unchanged versus the expected 0.1% increase. Consumer confidence was solid. ADP payrolls showed the economy added 275,000 jobs in April which was strong. The Fed left rates unchanged and the chair’s remarks indicated they are not considering a rate cut. Employment Cost Index for Q1 rose 0.7% as expected. The Institute for Supply Management (ISM) report printed at 52.8, weaker than the expected 55. Productivity data showed economic strength with no price pressures. Payrolls rose 263,000 versus the expected 200,000 increase. Mortgage interest rates finished the week with discount points unchanged.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Consumer Credit | Tuesday, May 7, 3:00 pm, et | $16B | Low importance. A significantly large increase may lead to lower mortgage interest rates. |
| 3-year Treasury Note Auction | Tuesday, May 7, 1:15 pm, et | Up 0.8% | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| 10-year Treasury Note Auction | Wednesday, May 8, 1:15 pm, et | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Weekly Jobless Claims | Thursday, May 9, 8:30 am, et | 225K | Important. An indication of employment. Higher claims may result in lower rates. |
| Producer Price Index | Thursday, May 9, 8:30 am, et | Up 0.4%, Core up 0.4% | Important. An indication of inflationary pressures at the producer level. Lower figures may lead to lower rates. |
| Trade Data | Thursday, May 9, 8:30 am, et | $49.9B deficit | Important. Bonds will be auctioned. Strong demand may lead to lower mortgage rates. |
| 30-year Treasury Bond Auction | Thursday, May 9, 1:15 pm, et | None | Important. Bonds will be auctioned. Strong demand may lead to lower mortgage rates. |
| Consumer Price Index | Friday, May 10, 8:30 am, et | Up 0.4%, Core up 0.2% | Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates. |
Fed Statement
Information received since the Federal Open Market Committee met in March indicates that the labor market remains strong and that economic activity rose at a solid rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Growth of household spending and business fixed investment slowed in the first quarter. On a 12-month basis, overall inflation and inflation for items other than food and energy have declined and are running below 2 percent. On balance, market-based measures of inflation compensation have remained low in recent months, and survey-based measures of longer-term inflation expectations are little changed. The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective as the most likely outcomes. In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.
