Market Comment
Mortgage bond prices finished the week a little better which pushed rates lower. Rates improved significantly the first portion of the week as the Fed continued their multi-billion-dollar daily MBS purchases. Unfortunately, the bounce back was temporary as there was significant weakness Thursday afternoon. The data was mixed. ISM Index was 60.8% vs the expected 58.8%. Weekly jobless claims were 745K vs 725K. Productivity fell 4.2% vs the expected 4.8% decrease. Factory orders rose 2.6% vs 2%. Unemployment was a solid 6.2% vs the expected 6.3%. Non-farm payrolls rose 379K vs the expected 200K increase. Larry Summers, former Clinton Treasury Secretary, continued to express concerns about the real risk of future inflation. He warned of the possibility of, “the most serious incipient inflation problem that we have faced in the last 40 years.” Mortgage interest rates finished the week better by approximately 3/8 of a discount point despite the volatility.
Looking Ahead
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| 3-year Treasury Note Auction | Tuesday, March 9, 1:15 pm, et |
None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Consumer Price Index | Wednesday, March 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. |
| 10-year Treasury Note Auction | Wednesday, March 10, 1:15 pm, et |
None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Weekly Jobless Claims | Thursday, March 11, 8:30 am, et |
745K | Important. An indication of employment. Higher claims may result in lower rates. |
| 30-year Treasury Bond Auction | Thursday, March 11, 1:15 pm, et |
None | Important. Bonds will be auctioned. Strong demand may lead to lower mortgage rates. |
| Producer Price Index | Friday, March 12, 8:30 am, et |
Up 0.3%, Core up 0.2% |
Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates. |
| U of Michigan Consumer Sentiment | Friday, March 12, 10:00 am, et |
78.5 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
Gas Prices
Fears of energy price increases are growing with gasoline prices pushing higher and in some areas over the $4/gallon mark. Most areas of the US have seen gas prices rise to levels not seen since March of last year. This comes amid a difficult time for many people as good jobs remain scarce, virus disruptions continue, and the economy remains fragile. Signs that gasoline prices are now increasing are not a welcome sight with price pressures already a concern.
The U.S. Energy Information Administration reported March 1, 2021 that the price of regular gasoline averaged $2.711 per gallon across the country. The Gulf Coast had the lowest average prices while the West Coast had the highest. Many analysts blame the price increases on weather related production disruptions. Others point to refinery supply issues tied to a changeover from winter formulations to summer formulations. Economists debate the impact the new US Administration’s Keystone pipeline cancellation has on prices. The fact is prices continue to escalate which is not good for consumers. Most predict that prices will continue to rise into the summer but there is some hope that prices will moderate as refineries come back online.
