MIG Market Watch, November 13th, 2023
Market Comment

Mortgage bond prices finished the week lower which put upward pressure on rates. We started on a negative note Monday and Tuesday, rebounded slightly mid-week, and ended the week negatively. Fed Chair Powell indicated, “We know that ongoing progress toward our 2% goal is not assured. Inflation has given us a few head fakes.” He continued, “If it becomes appropriate to tighten policy further, we will not hesitate to do so.” MBS prices fell sharply in response to his remarks. The longer-term US debt auctions saw lower than average foreign demand. The data remained mixed. The trade deficit was $61.5B as expected. Consumer sentiment was 60.4 vs 63.7. Weekly jobless claims were 217K vs 220K. Mortgage interest rates finished the week worse by approximately 1/2 of a discount point.

Looking Ahead
Economic Indicator Release Date & Time Consensus Estimate Analysis
Consumer Price Index Tuesday, Nov. 14,
8:30 am, et
Up 0.4%,
Core up 0.3%
Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates.
Retail Sales Wednesday, Nov. 15,
8:30 am, et
Up 0.7% Important. A measure of consumer demand. Weakness may lead to lower mortgage rates.
Producer Price Index Wednesday, Nov. 15,
8:30 am, et
Up 0.5%,
Core up 0.3%
Important. An indication of inflationary pressures at the producer level. Lower figures may lead to lower rates.
Weekly Jobless Claims Thursday, Nov. 16,
8:30 am, et
220K Important. An indication of employment. Higher claims may result in lower rates.
Philadelphia Fed Survey Thursday, Nov. 16,
8:30 am, et
9.2 Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
Industrial Production Thursday, Nov. 16,
9:15 am, et
Up 0.3% Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates.
Capacity Utilization Thursday, Nov. 16,
9:15 am, et
79.7% Important. A figure above 85% is viewed as inflationary. Weaker figure may lead to lower rates.
NAHB Housing Index Thursday, Nov. 16,
10:00 am, et
40 Moderately Important. A measure of single-family housing. Weakness may lead to lower mortgage rates.
Housing Starts Friday, Nov. 17,
8:30 am, et
1.34M Important. A measure of housing sector strength. Weakness may lead to lower rates.

Philadelphia Fed

Federal Reserve Banks were created to control the central banking system of the United States. The banks are divided into 12 districts and facilitate the monetary system by moving currency in and out of circulation in accordance with the policies set by the Federal Open Market Committee. The Reserve Banks handle check processing, hold cash reserves, and make loans to depository institutions. Each Reserve Bank regulates commercial banks in their district. The twelve districts include Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. The Philadelphia Fed report is a survey of manufacturing businesses in the Northeast region. The report is valuable due to the timing. It is released before the month is over and is the second regional report released. While there are many other regional reports throughout the month the Philadelphia Fed report is considered the most valuable. It has historically shown strong correlation with purchasing managers index data and therefore analysts give it considerable attention.