MARKET COMMENT
Mortgage bond prices finished the week near unchanged which kept rates flat. Rates improved Monday morning only to give back the gains Tuesday. Housing starts were 1.314M versus the expected 1.3M. Trade tensions flared as the House and Senate passed the Human Rights and Democracy Act and China responded with a sharp response that indicated “the U.S. has to bear all the consequences.” The data later in the week was mixed. Weekly jobless claims were 227K versus the expected 216K. The Philadelphia Fed report was 10.4. Analysts expected a reading of 5.5. Existing home sales were 5.46M versus the expected 5.5M. LEI fell 0.1% as expected. Consumer sentiment was 96.8 versus the expected 94.9. Mortgage interest rates finished the week with discount points near unchanged.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Consumer Confidence | Tuesday, Nov. 26, 10:00 am, et | 126 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| New Home Sales | Tuesday, Nov. 26, 10:00 am, et | 710K | Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
| Personal Income and Outlays | Wednesday, Nov. 27, 8:30 am, et | Up 0.3%, Up 0.1% | Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
| PCE Core Inflation | Wednesday, Nov. 27, 8:30 am, et | Up 1.6% | Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve. |
| Durable Goods Orders | Wednesday, Nov. 27, 8:30 am, et | Down 1.2% | Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates. |
| Fed “Beige Book” | Wednesday, Nov. 27, 2:00 pm, et | None | Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates. |
| Weekly Jobless Claims | Friday, Nov. 29, 8:30 am, et | 220K | Important. An indication of employment. Higher claims may result in lower rates. |
FED MINUTES
The minutes from the last Federal Open Market Committee indicated the Fed is done with rate cuts for now. They specifically noted that some members believed the Committee “should reinforce its postmeeting statement with additional communications indicating that another reduction in the federal funds rate was unlikely in the near term unless incoming information was consistent with a significant slowdown in the pace of economic activity.
The information available for the October 29–30 meeting indicated that labor market conditions remained strong and that real gross domestic product (GDP) increased at a moderate rate in the third quarter. Consumer price inflation, as measured by the 12-month percentage change in the price index for personal consumption expenditures (PCE), remained below 2 percent in August. Survey-based measures of longer-run inflation expectations were little changed. Financing conditions in the residential mortgage market remained accommodative on balance. Mortgage rates were little changed since the September FOMC meeting and stayed near their lowest level since mid-2016. In September, home-purchase originations remained around the relatively high level seen during the previous two months, while refinancing originations jumped to their highest level since late 2012.”
