MARKET COMMENT
Mortgage bond prices finished the week mixed with conventional prices near unchanged and government prices lower. This kept rates neutral to slightly higher. Rates started the week higher Monday morning as the Fed announced reductions in their billion-dollar MBS tentative purchase schedule. The negative trend continued Tuesday morning. Oil prices remained extremely low. The data was mixed. The FHFA house price index rose 0.7% vs the expected 0.5% increase. Weekly jobless claims were 4.427M vs the expected 4.2M. New home sales were 627K. Analysts looked for a reading of 655K. Durable goods order fell 14.4% which was sharper than the expected 10% decrease. Mortgage interest rates finished the week unchanged to worse by approximately 1/4 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Consumer Confidence | Tuesday, April 28, 10:00 am, et | 85 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| Advance Q1 GDP | Wednesday, April 29, 8:30 am, et | Down 4% | Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| Fed Meeting Adjourns | Wednesday, April 29, 2:15 pm, et | No rate changes | Important. Nobody expects the Fed to change rates, but some volatility may surround the adjournment of this meeting. |
| Weekly Jobless Claims | Thursday, April 30, 8:30 am, et | 4.6M | Important. An indication of employment. Higher claims may result in lower rates. |
| Personal Income and Outlays | Thursday, April 30, 8:30 am, et | Down 1.5%, Down 5.1% | Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
| PCE Core Inflation | Thursday, April 30, 8:30 am, et | Up 0.1% | Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve. |
| Q1 Employment Cost Index | Thursday, April 30, 8:30 am, et | Up 0.7% | Very important. A measure of wage inflation. Weakness may lead to lower rates. |
| ISM Index | Tuesday, May 1, 10:00 am, et | 36.7 | Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates. |
ISM INDEX
The Institute for Supply Management (ISM), formerly the National Association of Purchasing Management (NAPM), releases the “Report on Business” on the first working day of each month. Part of this report is the “diffusion index,” which tracks the economy’s ups and downs well.
In conducting this survey, the ISM questions purchasing executives from over 250 industrial companies compiling data on production, orders, commodity prices, inventories, vendor performance, and employment. Each of the respondents is asked to rank the categories as “up” or “down.” Various weights are applied to the individual components to form the composite index. A composite index reading of 50 can be thought of as a “swing point.” A reading above 50 implies an increase in economic activity, while a reading below 50 indicates a decline. The ISM report is difficult for economists to forecast because there is little data upon which to base an educated guess. The report has a large “surprise factor” and can cause market swings. Be cautious heading into the release.
