![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. The improvements came early and late in the trading week with some sharp weakness mid-week. There were very few economic releases to start the week, and the consumer credit report showed a reading of $25.45B vs $12.5B. Rates shot higher in response to higher CPI and PPI readings. CPI rose 0.2% as expected. The core rose 0.3% vs 0.2%. Producer prices rose 0.2% vs 0.1%. The Core rose 0.3% vs 0.2%. Weekly jobless claims were 230K as expected. Consumer sentiment was 69 vs 68. Mortgage interest rates finished the week with discount points better by approximately 1/4 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
|---|---|---|---|
| Retail Sales | Tuesday, Sept. 17, 8:30 am, et | Up 0.2% | Important. A measure of consumer demand. Weakness may lead to lower mortgage rates. |
| Industrial Production | Tuesday, Sept. 17, 9:15 am, et | Up 0.1% | Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
| Capacity Utilization | Tuesday, Sept. 17, 9:15 am, et | 77.8% | Important. A figure above 85% is viewed as inflationary. Weakness may lead to lower rates. |
| NAHB Housing Index | Tuesday, Sept. 17, 10:00 am, et | 45 | Moderately Important. A measure of single-family housing. Weakness may lead to lower mortgage rates. |
| Housing Starts | Wednesday, Sept. 18, 8:30 am, et | 1.25M | Important. A measure of housing sector strength. Weakness may lead to lower rates. |
| Fed Meeting Adjourns | Wednesday, Sept. 18, 2:15 pm, et | 25 basis point cut | Important. Most expect the Fed to cut rates. Volatility may surround the adjournment of this meeting. |
| Philadelphia Fed Survey | Thursday, Sept. 19, 10:00 am, et | 12.2 | Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates. |
| Leading Economic Indicators | Thursday, Sept. 19, 10:00 am, et | Down 0.3% | Important. An indication of future economic activity. Weakness may lead to lower rates. |
| Existing Home Sales | Thursday, Sept. 19, 10:00 am, et | 3.85M | Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates. |
Inflation
The recent inflation readings caused some concern as the Fed is expected to pivot and cut rates this week. Some of the components of both the producer and consumer price indices showed higher than expected readings. Prior to the releases there were many analysts who predicted a 50 basis point cut by the Fed this week. That is still a possibility, but the odds decreased with the higher inflation readings. The overwhelming consensus is that the Fed will cut rates 25 basis points. Inflation, real or perceived, erodes the value of fixed income investments, which causes prices to fall and rates to rise. We saw that a little last week in response to the PPI release. The Fed is clear that they remain data dependent regarding future rate adjustments. That is why the focus on economic releases is so important. The Fed wants to see low inflation with steady economic growth.
