![Mortgage Investors Group in [Dynamic1]](../assets/images/mortgage-investors-group.svg)
Market Comment
Mortgage bond prices finished the week sharply lower which put upward pressure on rates. We started the week on a positive note amid weak economic data. ISM Index was 50.9 vs 51.3. Construction spending fell 0.7% vs the expected 0.4% decrease. US debt instruments also benefitted early Monday on reports of financial concerns abroad specifically regarding Swiss bank Credit Suisse. Selling pressure emerged Wednesday and continued throughout the end of the week. Inflation fears ramped higher as OPEC voted to reduce crude output by 2M barrels a day. The trade deficit was $67.4B vs $67.7B. Weekly jobless claims were 219K vs 203K. The stronger than expected employment report sent rates higher Friday morning. Unemployment came in at 3.5% vs 3.7%. Payrolls rose 263K vs 250K. Average hourly earnings rose 0.3% as expected. Mortgage interest rates finished the week worse by approximately 7/8 of a discount point.
Looking Ahead
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Producer Price Index | Wednesday, Oct. 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. |
| Consumer Price Index | Thursday, Oct. 13, 8:30 am, et |
Up 0.3%, Core up 0.5% |
Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates. |
| Weekly Jobless Claims | Thursday, Oct. 13, 8:30 am, et |
238K | Important. An indication of employment. Higher claims may result in lower rates. |
| Retail Sales | Friday, Oct. 14, 8:30 am, et |
Up 0.2% | Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates. |
| Business Inventories | Friday, Oct. 14, 10:00 am, et |
Up 0.6% | Low importance. An indication of stored-up capacity. A significantly larger increase may lead to lower rates. |
| U of Michigan Consumer Sentiment | Friday, Oct. 14, 10:00 am, et |
58.9 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
Business Inventories
The report on business inventories gives a broader look at the durable goods, factory orders, and retail sales reports. Not only is this report an important part of the investment component of the GDP, but it also provides additional evidence about the economy in the upcoming months.
Changes in business inventories slow as the economy approaches a peak and rise as the economy approaches the trough of a recession. Therefore, the change in business inventories is a leading indicator of GDP.
The data for this report, which are published by the Department of Commerce’s Census Bureau, comes from a monthly survey of inventories, orders, and manufacturers’ shipments, in addition to the merchant wholesalers and retail trade surveys.
The data is a mid-tier release. However, in this environment every piece of data has the potential to cause volatility.
