MIG Market Watch, March 11th, 2024
Market Comment

Mortgage bond prices finished the week sharply higher which put downward pressure on rates. We saw positive movements most of the week which was a change from the first few months of trading this year. The data started to show more evidence the high interest rate environment was impacting inflation and the economy which is exactly what the Fed needs to see before pivoting. Factory orders fell 3.6% vs the expected 2.9% decline. ADP employment was 140K vs 150K. Weekly jobless claims were 217K vs 215K, Productivity rose 3.2% vs 3.1%. Unemployment was 3.9% vs 3.7%. Payrolls rose 275K vs 200K. Average hourly earnings rose 0.1% vs 0.3%. Mortgage interest rates finished the week better by approximately 3/4 to 7/8 of a discount point.


Looking Ahead
Economic Indicator Release Date & Time Consensus Estimate Analysis
3-year Treasury Note Auction Monday, March 11,
1:15 pm, et
None Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
Consumer Price Index Tuesday, March 12,
8:30 am, et
Up 0.4%,
Core up 0.3%
Important. A measure of inflation at the consumer level. Lower than expected increases may lead to lower rates.
10-year Treasury Note Auction Tuesday, March 12,
1:15 pm, et
None Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
30Y Treasury Bond Auction Wednesday, March 13,
1:15 pm, et
None Bonds will be auctioned. Strong demand may lead to lower mortgage rates.
Producer Price Index Thursday, March 14,
8:30 am, et
Up 0.3%,
Core up 0.2%
Important. An indication of inflationary pressures at the producer level. Lower figures may lead to lower rates.
Retail Sales Thursday, March 14,
8:30 am, et
Up 0.5% Important. A measure of consumer demand. Weakness may lead to lower mortgage rates.
Industrial Production Friday, March 15,
9:15 am, et
Up 0.1% Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Capacity Utilization Friday, March 15,
9:15 am, et
78.4% Important. A figure above 85% is viewed as inflationary. Weakness may lead to lower rates.
Michigan Consumer Sentiment Friday, March 15,
10:00 am, et
76.9 Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

Powell’s Remarks

The Fed Chair delivered his remarks to Congress last week and they were generally well-received by the mortgage market. Powell stated, “While inflation remains above the Federal Open Market Committee’s (FOMC) objective of 2 percent, it has eased substantially, and the slowing in inflation has occurred without a significant increase in unemployment. As labor market tightness has eased and progress on inflation has continued, the risks to achieving our employment and inflation goals have been moving into better balance.” He continued, “If the economy evolves broadly as expected, it will likely be appropriate to begin dialing back policy restraint at some point this year.”

The great news is that rate cuts are expected. The uncertainty is the timing. Be cautious with rate decisions until the Fed is closer to pivoting.

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