Market Comment
Mortgage bond prices finished the week higher which helped rate improve slightly. Trading started on a positive note Monday, turned negative mid-week, and recovered Friday. The data was mixed. Factory orders fell 1.6% vs the expected 1.8% decline. ADP employment rose 242K vs 200K. The trade deficit was $68.3B vs $68.9B. Weekly jobless claims hinted the hikes might be impacting things with a reading of 211K vs 195K. Unemployment was 3.6% vs 3.4%. The higher headline figure helped rates rebound considerably. Payrolls rose 311K vs 205K. Average hourly earnings rose 0.2% vs 0.3%. Mortgage interest rates finished the week better by approximately 1/8 of a discount point.
Looking Ahead
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Consumer Price Index | Tuesday, March 14, 8:30 am, et |
Up 0.5%, Core up 0.4% |
Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates. |
| Retail Sales | Wednesday, March 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. |
| Producer Price Index | Wednesday, March 15, 8:30 am, et |
Up 0.5%, Core up 0.3% |
Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates. |
| NAHB Housing Index | Wednesday, March 15, 10:00 am, et |
42 | Moderately Important. A measure of single-family housing. Weakness may lead to lower mortgage rates. |
| Housing Starts | Thursday, March 16, 8:30 am, et |
1.31M | Important. A measure of housing sector strength. Weakness may lead to lower rates. |
| Philadelphia Fed Survey | Thursday, March 16, 10:00 am, et |
1.7 | Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates. |
| Leading Economic Indicators | Friday, March 17, 10:00 am, et |
Down 0.3% | Important. An indication of future economic activity. Weakness may lead to lower rates. |
| U of Michigan Consumer Sentiment | Friday, March 17, 10:00 am, et |
67.5 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
Powell’s Remarks
Fed Chair Powell delivered the Federal Reserve’s semiannual report on monetary policy last week. As warned earlier, rates spiked higher Tuesday and Wednesday in response. Powell indicated, “With inflation well above our longer-run goal of 2 percent and with the labor market remaining extremely tight, the FOMC has continued to tighten the stance of monetary policy, raising interest rates by 4-1/2 percentage points over the past year. We continue to anticipate that ongoing increases in the target range for the federal funds rate will be appropriate in order to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2 percent over time. In addition, we are continuing the process of significantly reducing the size of our balance sheet.” He provided forward guidance with the following, “We will continue to make our decisions meeting by meeting, taking into account the totality of incoming data and their implications for the outlook for economic activity and inflation.”
Data is the key going forward. Be cautious heading into economic events in the short-term.
