![Mortgage Investors Group in [Dynamic1]](../assets/images/mortgage-investors-group.svg)
Market Comment
Mortgage bond prices finished the week lower which put upward pressure on rates. We started the week on a negative note, turned slightly positive Tuesday morning, then turned back negative the remainder of the week. The economic releases did very little to help rates despite some favorable readings. Existing home sales were weaker than expected at 4.14M vs 4.21M. Weekly jobless claims came in at 215K vs 220K. New home sales were 634K vs 680K. Durable goods orders rose 0.7% vs the expected 0.8% decrease. Consumer sentiment was 69.1 vs 67.5. The Fed Beige Book reported they may keep rates higher longer if inflation persists. 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 |
|---|---|---|---|
| FHFA House Price Index | Tuesday, May 28, 10:00 am, et | Up 1.2% | Moderately Important. A measure of single-family house prices. Weakness may lead to lower rates. |
| Consumer Confidence | Tuesday, May 28, 10:00 am, et | 95.9 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| Treasury Auctions Begin | Tuesday, May 28, 1:15 pm, et | None | Important. 2Y and 5Y Notes will be auctioned Tuesday, 7Y notes Wednesday. Strong demand may lead to lower rates. |
| Fed “Beige Book” | Wednesday, May 29, 2:00 pm, et | None | Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates. |
| Q2 GDP | Thursday, May 30, 8:30 am, et | Up 1.5% | Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| Weekly Jobless Claims | Thursday, May 30, 8:30 am, et | 218K | Important. An indication of employment. Higher claims may result in lower rates. |
| Personal Income and Outlays | Friday, May 31, 8:30 am, et | Up 0.3%, Up 0.3% | Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
| PCE Core Inflation | Friday, May 31, 8:30 am, et | Up 0.3% | Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve. |
Consumer Confidence
The Conference Board releases the Consumer Confidence Index on the last Tuesday of every month. The report details the levels of confidence individual households have in the performance of the economy. The data is derived from a survey of 5,000 households nationwide. The survey polls consumer opinions on current business conditions, their jobs, their incomes, and their future spending plans. The Conference Board is a non-profit group that has produced the data since 1967.
The consumer confidence index is significant in that it provides a precursor into the willingness of consumers to spend in the months ahead. Consumers are vital to the US economy as consumer spending is a large portion of the gross domestic product. Manufacturers attempt to gauge consumer spending and adjust production accordingly. The challenge that many analysts note is the fact that a consumer’s willingness to spend does not always convert to an actual expenditure.
Be cautious heading into economic releases in the days ahead. Signs of strength will likely push rates higher. However, significant weakness could alleviate rate pressures.
