![Mortgage Investors Group in [Dynamic1]](../assets/images/mortgage-investors-group.svg)
Market Comment
Mortgage bond prices finished the week lower which put significant upward pressure on rates. The Fed continued their daily MBS reinvestments, but it was not enough the stem the selling pressure. Inflation fears dominated trading. Oil prices hovered around $120 per barrel and fuel prices averaged $5 per gallon across the Nation. The trade deficit was $87.1B vs $90.2B. Weekly jobless claims were 229K vs 211K. The big hit came with higher consumer inflation readings. Consumer prices rose 1% vs 0.7%. The core rose 0.6% vs 0.5%. The yearly change was 8.6% which was the highest since 1981. Mortgage interest rates finished the week worse by approximately a full discount point
Looking Ahead
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Producer Price Index | Tuesday, June 14, 8:30 am, et |
Up 0.8%, Core up 0.6% |
Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates. |
| Retail Sales | Wednesday, June 15, 8:30 am, et |
Up 0.3% | Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates. |
| NAHB Housing Index | Wednesday, June 15, 10:00 am, et |
68 | Moderately Important. A measure of single-family housing. Weakness may lead to lower mortgage rates. |
| Fed Meeting Adjourns | Wednesday, June 15, 2:15 pm, et |
50 basis point increase | Important. Most expect the Fed to change rates. Volatility may surround the adjournment of this meeting. |
| Weekly Jobless Claims | Thursday, June 16, 8:30 am, et |
212K | Important. An indication of employment. Higher claims may result in lower rates. |
| Housing Starts | Thursday, June 16, 8:30 am, et |
1.7M | Important. A measure of housing sector strength. Weakness may lead to lower rates. |
| Philadelphia Fed Survey | Thursday, June 16, 10:00 am, et |
6.8 | Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates. |
| Industrial Production | Friday, June 17, 9:15 am, et |
Up 0.4% | Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
| Capacity Utilization | Friday, June 17, 9:15 am, et |
79.2% | Important. A figure above 85% is viewed as inflationary. Weakness may lead to lower rates. |
Fed Hikes
The Federal Open Market Committee meet this week and is expected to raise rates. The financial markets now expect a 50-basis point increase this month, July, and September. Some economists even predict another hike in December. Inflation readings continue to come in above estimates and Fed officials are scrambling to keep a lid on it. Both Treasury Secretary Yellen and Fed Chair Powell indicate their view that inflation is “transitory” was mistaken. Mortgage interest rates are likely to continue their upward trend until inflation fears subside. A cautious approach to float/lock decisions is prudent in this uncertain environment.
