MIG Market Watch, July 13th, 2020

MARKET COMMENT
Mortgage bond prices finished the week higher which put downward pressure on rates. Rates were flat Monday morning but pushed lower that afternoon and generally all the way through Thursday. Some selling pressure emerged the last part of the week but not enough to erase the earlier improvements. The Fed remained the driver of rates with billion-dollar daily purchases of mortgage bonds. The Treasury auctions showed solid foreign demand. Stocks saw losses throughout a lot of the week but looked to close on a positive note Friday. The economic data was sparse and mixed. Weekly jobless claims were 1.314M vs the expected 1.37M. Producer prices were mixed (see below.) Mortgage interest rates finished the week better by approximately 3/8 to 1/2 of a discount point.

LOOKING AHEAD

Economic Indicator Release Date & Time Consensus Estimate Analysis
Consumer Price Index Tuesday, July 14,
8:30 am, et
Up 0.1%,
Core up 0.3%
Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates.
Industrial Production Wednesday, July 15,
9:15 am, et
Up 4.1% Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates.
Capacity Utilization Wednesday, July 15,
9:15 am, et
68% Important. A figure above 85% is viewed as inflationary. Weaker figure may lead to lower rates.
Weekly Jobless Claims Thursday, July 16,
8:30 am, et
1.3M Important. An indication of employment. Higher claims may result in lower rates.
Philadelphia Fed Survey Thursday, July 16,
10:00 am, et
Down 23 Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
Retail Sales Thursday, July 16,
8:30 am, et
Up 4.4% Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates.
NAHB Housing Index Thursday, July 16,
10:00 am, et
45 Moderately Important. A measure of single-family housing. Weakness may lead to lower mortgage rates.
Housing Starts Friday, July 17,
8:30 am, et
1.163M Important. A measure of housing sector strength. Weakness may lead to lower rates.
U of Michigan Consumer Sentiment Friday, July 17,
10:00 am, et
80 Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

PRODUCER PRICES
The US Bureau of Labor statistics indicated “the Producer Price Index for final demand fell 0.2 percent in June, seasonally adjusted. This decrease followed a 0.4-percent increase in May and a 1.3-percent decline in April. On an unadjusted basis, the final demand index moved down 0.8 percent for the 12 months ended in June.

In June, the decrease in the final demand index is attributable to a 0.3-percent decline in prices for final demand services. In contrast, the index for final demand goods rose 0.2 percent. Prices for final demand less foods, energy, and trade services advanced 0.3 percent in June, the largest increase since a 0.3-percent rise in January. For the 12 months ended in June, prices for final demand less foods, energy, and trade services edged down 0.1 percent.”

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