![Mortgage Investors Group in [Dynamic1]](../assets/images/mortgage-investors-group.svg)
Market Comment
Mortgage bond prices finished the week higher which put downward pressure on rates. Most of the improvements came early in the trading week. Rates were slightly better when trading resumed Tuesday, showed a solid gain Wednesday morning, and then were steady the remainder of the week. The data was mixed. ISM Index was 47.2 vs 47.5. Factory orders rose 5% vs 4.7%. The trade deficit was $78.8B vs $79B. ADP employment rose 99K vs 145K. Weekly jobless claims were 227K vs 230K. The mixed employment report Friday kept rates in check that morning. Mortgage interest rates finished the week with discount points better by approximately 3/8 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
|---|---|---|---|
| Consumer Credit | Monday, Sept. 9, 3:00 pm, et | $12.2B | Low importance. A significantly large increase may lead to lower mortgage interest rates. |
| 3-year Treasury Note Auction | Tuesday, Sept. 10, 1:15 pm, et | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Consumer Price Index | Wednesday, Sept. 11, 8:30 am, et | Up 0.2%, Core up 0.2% | Important. A measure of inflation at the consumer level. Lower than expected increases may lead to lower rates. |
| 10-year Treasury Note Auction | Wednesday, Sept. 11, 1:15 pm, et | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Producer Price Index | Thursday, Sept. 12, 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. |
| Weekly Jobless Claims | Thursday, Sept. 12, 8:30 am, et | 230K | Important. An indication of employment. Higher claims may result in lower rates. |
| 30-year Treasury Bond Auction | Thursday, Sept. 12, 1:15 pm, et | None | Important. Bonds will be auctioned. Strong demand may lead to lower mortgage rates. |
| U of Michigan Consumer Sentiment | Friday, Sept. 13, 10:00 am, et | 68 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
Mixed Employment
The U.S. Bureau of Labor Statistics reported last Friday that “Total nonfarm payroll employment increased by 142,000 in August, and the unemployment rate changed little at 4.2 percent.” The payroll’s figure was weaker than the expected 160,000 increase while the headline number was exactly as expected. Average hourly earnings rose 0.4% vs the expected 0.3%. “Job gains occurred in construction and health care” according to the release.
The employment report is one of the most important economic releases each month. The Fed has signaled a pivot is imminent. However, they have also stated that it is data dependent. The Fed’s dual mandate of maximum employment and price stability remains a challenge with higher-than-expected wages now appearing on the radar. The markets priced in a pivot starting with a 25-basis point cut September 18th. Additional rate cuts are expected in November and December but those are not a certainty.
