![Mortgage Investors Group in [Dynamic1]](../assets/images/mortgage-investors-group.svg)
Market Comment
Mortgage bond prices finished the week sharply higher which put significant downward pressure on rates. The financial markets reacted favorably to the upcoming US Administration’s recommendation for Treasury Secretary. Analysts viewed the pick as beneficial to putting downward pressure on inflation to get back to the 2% goal. The data was concentrated in the middle of the week and showed decent growth with moderate price pressures. FHFA housing rose 0.7% vs 0.3%. Consumer confidence was 111.7 vs 111.3. New home sales were 610K vs 730K. Personal income rose 0.6% vs 0.3%. Spending was up 0.4% vs 0.3%. Core PCE rose 0.3% as expected. Durable goods rose 0.2% vs 0.5%. GDP was up 2.8% as expected. Mortgage interest rates finished the week better by approximately one full discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
|---|---|---|---|
| ISM Index | Monday, Dec. 2, 10:00 am, et | 47.5 | Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates. |
| ADP Employment | Wednesday, Dec. 4, 8:30 am, et | 230K | Important. An indication of employment. Weakness may bring lower rates. |
| Factory Orders | Wednesday, Dec. 4, 10:00 am, et | Up 0.4% | Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
| Fed “Beige Book” | Wednesday, Dec. 4, 2:00 pm, et | None | Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates. |
| Trade Data | Thursday, Dec. 5, 8:30 am, et | $78.8B deficit | Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates. |
| Employment | Friday, Dec. 6, 8:30 am, et | 4.1%, Payrolls +183K | Very important. An increase in unemployment or weakness in payrolls may bring lower rates. |
| U of Michigan Consumer Sentiment | Friday, Dec. 6, 10:00 am, et | 72 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
Factory Orders
Factory orders data is a monthly report released by the US Census Bureau. The release is officially referred to as The Advance Report on Durable Goods Manufacturers’ Shipments, Inventories, and Orders. The manufacturing sector is a major component of the economy. Investors use the factory orders report to attempt to determine the direction of the economy in the future. Orders are generally believed to be a precursor to activity in the manufacturing sector because manufacturing typically has an order before considering an increase in production. Conversely, a decrease in orders eventually causes production to scale back; otherwise, the manufacturer accumulates inventories, which must be financed. Total factory orders break down to approximately 55% durable and 45% non-durable. Durable goods are items such as refrigerators, cars, and aircraft. Non-durables are items such as cigarettes, candy, and soap. Durable goods orders are typically reported a week earlier making a portion of the factory orders data “old news.” However, the orders report provides a more complete picture than the initial durable goods release. Revisions to initial data along with non-durable figures are factored in providing a more accurate look at the condition of the manufacturing sector.
