![Mortgage Investors Group in [Dynamic1]](../assets/images/mortgage-investors-group.svg)
Market Comment
Mortgage bond prices finished the week sharply lower which put significant upward pressure on rates. The trend from the prior weeks was reversed and selling pressure dominated. Rates worsened every day except Wednesday. The data was mixed with some indications of inflationary pressures. Q3 Productivity rose 2.2% as expected. Consumer prices rose 0.3% as expected. The core, which excludes volatile food and energy prices, rose 0.3% as expected Producer prices rose 0.4% vs 0.2% and the MBS market reacted negatively to the headline figure. The core rose 0.2% as expected. Weekly jobless claims were 242K vs 220K. Mortgage interest rates finished the week worse by approximately a full discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
|---|---|---|---|
| Retail Sales | Tuesday, Dec. 17, 8:30 am, et | Up 0.5% | Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates. |
| Industrial Production | Tuesday, Dec. 17, 9:15 am, et | Up 0.1% | Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
| Capacity Utilization | Tuesday, Dec. 17, 9:15 am, et | 77.2% | Important. A figure above 85% is viewed as inflationary. Weaker figure may lead to lower rates. |
| NAHB Housing Index | Tuesday, Dec. 17, 10:00 am, et | 46 | Moderately Important. A measure of single-family housing. Weakness may lead to lower mortgage rates. |
| Housing Starts | Wednesday, Dec. 18, 8:30 am, et | 1.34M | Important. A measure of housing sector strength. Weakness may lead to lower rates. |
| Fed Meeting Adjourns | Wednesday, Dec. 18, 2:15 pm, et | 25 basis point cut | Important. Most expect the Fed to change rates. Volatility may surround the adjournment of this meeting. |
| Q3 GDP | Thursday, Dec. 19, 8:30 am, et | Up 2.8% | Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| Personal Income and Outlays | Friday, Dec. 20, 8:30 am, et | Up 0.4%, Up 0.5% | Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
| PCE Core Inflation | Friday, Dec. 20, 8:30 am, et | Up 0.2% | Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve. |
A Sure Thing
Timing is one of the most important factors in success. Unfortunately, knowing the perfect time to lock in a loan is impossible until after the fact. While analysts constantly try to predict the future, the bottom line is they continually fall short in terms of accuracy. The Fed is a prime example of this. They constantly adjust inflation expectations and rate hikes and cuts according to data released each month.
Mortgage rates today are a sure thing. Floating is risky as we saw clearly last week. Stronger than expected data can cause rates to quickly spike higher. The great news is the Fed is confident their fight against inflation has worked to the point that they can ease rates this week. However, rates are often volatile around the Fed meeting so caution is key.
