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MIG Market Watch, May 27th, 2019

MIG Market Watch, May 27th, 2019


MIG Market Watch, May 27th, 2019

MARKET COMMENT

Mortgage bond prices finished the week slightly higher which helped rates improve. Stocks experienced large up and down swings and mortgage-backed securities benefitted as a result. The US/China trade dispute escalated as major US tech companies suspended business with China based Huawei. The economic news was mixed as usual. Existing home sales were 5.19M versus the expected 5.35M. Weekly jobless claims came in at 211K, expected 218K. Continuing claims were 1.676M, expected 1.664M. New home sales were 673K versus the expected 665K. Durable goods orders fell 2.15. Analysts looked for a 2% decrease. The Treasury auction saw solid foreign demand. Mortgage interest rates still finished the week better by approximately 1/8 of a discount point despite the choppy trading.

LOOKING AHEAD

Economic Indicator Release Date & Time Consensus Estimate Analysis
FHFA House Price Index Tuesday, May 28,
10:00 am, et
Up 0.4% Moderately Important. A measure of single family house prices. Weakness may lead to lower rates.
Consumer Confidence Tuesday, May 28,
10:00 am, et
129 Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Treasury Auctions Begin Tuesday, May 28,
1:15 pm, et
None Important. 2Y Notes on Tuesday, 5Y Notes on Wednesday, and 7Y Notes on Thursday.
Weekly Jobless Claims Thursday, May 30,
8:30 am, et
215K Important. An indication of employment. Higher claims may result in lower rates.
Q1 GDP Thursday, May 30,
8:30 am, et
Up 3.1% Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.
Personal Income and Outlays Friday, May 31,
8:30 am, et
Up 0.2%,
Up 0.4%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
PCE Core Inflation Friday, May 31,
8:30 am, et
Up 0.2% Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve.
U of Michigan Consumer Sentiment Friday, May 31,
10:00 am, et
97.5 Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

 


Foreign Trouble

News out of the eurozone last week resulted in some flight to safety buying of US debt instruments such as Treasuries and mortgage-backed securities. A German purchasing managers index showed only a slight uptick in growth. This had traders concerned as Germany is seen as the bellweather of the eurozone. The region is immersed in continued trade disputes and a lot of financial headlines focused on continued BREXIT turmoil.

Treasuries saw yields fall sharply while MBSs only saw modest improvements. This is another reminder of the difference between the rates that fund the US Government and those that fund home purchases. Be cautious heading into the auctions this weak in the event foreign demand for US debt changes. Now is a great time to take advantage of historically favorable rates.

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