Market Comment
Mortgage bond prices finished the week higher which helped rates improve. There were very few economic releases but considerable volatility. Rates improved to start the week, quickly reversed course Tuesday, bounced back Thursday afternoon, and sold off again Friday morning. Inflation data was lower than expected. Consumer prices fell 0.1% vs the expected unchanged reading. The core rose 0.3% as expected. Weekly jobless claims were 205K vs 215K. Consumer sentiment was 64.6 vs 60.5. Mortgage interest rates finished the week better by approximately 1/2 of a discount point.
Looking Ahead
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Producer Price Index | Wednesday, Jan. 18, 8:30 am, et |
Down 0.1%, Core up 0.1% |
Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates. |
| Retail Sales | Wednesday, Jan. 18, 8:30 am, et |
Down 0.8% | Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates. |
| Industrial Production | Wednesday, Jan. 18, 9:15 am, et |
Down 0.1% | Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates. |
| Capacity Utilization | Wednesday, Jan. 18, 9:15 am, et |
79.6% | Important. A figure above 85% is viewed as inflationary. Weaker figure may lead to lower rates. |
| NAHB Housing Index | Wednesday, Jan. 18, 10:00 am, et |
31 | Moderately Important. A measure of single-family housing. Weakness may lead to lower mortgage rates. |
| Fed “Beige Book” | Wednesday, Jan. 18, 2:00 pm, et |
None | Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates. |
| Weekly Jobless Claims | Thursday, Jan. 19, 8:30 am, et |
205K | Important. An indication of employment. Higher claims may result in lower rates. |
| Housing Starts | Thursday, Jan. 19, 8:30 am, et |
Down 0.5% | Important. A measure of housing sector strength. Weakness may lead to lower rates. |
| Philadelphia Fed Survey | Thursday, Jan. 19, 10:00 am, et |
3.8 | Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates. |
Busy Week
Economic data is usually the number one reason mortgage interest rates move daily. Data is compiled from numerous sources and comes in two flavors, economic growth and inflation. Some releases are more important than others and thus are more likely to cause wider swings in mortgage rates. Rates move in relation to the deviation from expectations. We have significant releases all week. The potential for mortgage interest rate volatility is greater as a result.
The recent short-term trend has been favorable. Future rate volatility is likely, so caution is key.
