![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. Trading started negatively Monday, was neutral mid-week and recovered some of the earlier losses Friday morning. The Bank of International Settlements, the umbrella body for central banks, warned heavily indebted nations on Sunday of the possibility of a sudden loss of market confidence if the wrong actions were taken. They stated, “confidence could quickly crumble if economic momentum weakens and an urgent need for public spending arises on both structural and cyclical fronts.” They also warned, “A premature easing could reignite inflationary pressures and force a costly policy reversal.” Mortgage interest rates finished the week worse by approximately 3/8 of a discount point.
Looking Ahead
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
|---|---|---|---|
| Consumer Credit | Monday, July 8, 3:00 pm, et | $8.65B | Low importance. A significantly large increase may lead to lower mortgage interest rates. |
| Fed Chair Testimony | Tuesday, July 9, 10:00 am, et | None | Important. Anytime the Fed Chair speaks the financial markets listen. Volatility may surround this testimony. |
| 3-year Treasury Note Auction | Tuesday, July 9, 1:15 pm, et | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| 10-year Treasury Note Auction | Wednesday, July 10, 1:15 pm, et | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Consumer Price Index | Thursday, July 11, 8:30 am, et | Up 0.1%, Core up 0.2% | Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates. |
| 30-year Treasury Bond Auction | Thursday, July 11, 1:15 pm, et | None | Important. Bonds will be auctioned. Strong demand may lead to lower mortgage rates. |
| Producer Price Index | Friday, July 12, 8:30 am, et | Up 0.1%, Core up 0.2% | Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates. |
| U of Michigan Consumer Sentiment | Friday, July 12, 10:00 am, et | 68 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
Fed Testimony
The Fed Chair delivers the 2nd installment of the Federal Reserve’s semiannual report on monetary policy, familiarly called the Humphrey-Hawkins report, to both the House and Senate Banking Committees this week. The House testimony will start Tuesday and will be repeated Wednesday in the Senate.
The report is one of the most important speeches given by the Fed Chair and was originally mandated by the Full Employment and Balanced Growth Act. The remarks made to each committee tend to be identical in nature and address basic economic principles. The areas addressed tend to be the overall state of the US economy, recent developments, economic fundamentals, foreign developments, economic outlook, ranges for growth, and concluding remarks. Senator Hubert Humphrey and Representative Augustus Hawkins originally sponsored the legislation in 1977.
There is a potential for market volatility anytime Fed Chair Powell speaks. Exactly what rates will do is unknown, even to Powell. Therefore, a cautious approach to rate decisions is prudent surrounding this event.
