![Mortgage Investors Group in [Dynamic1]](../assets/images/mortgage-investors-group.svg)
Market Comment
Mortgage bond prices finished the week lower which put a little upward pressure on rates. Trading was choppy but within a narrow range. Rates improved slightly Tuesday morning, shot higher mid-week, and recovered a little Friday morning. Surging stocks and uncertainty surrounding the new US Administration’s tariff policies dominated headlines. There were very few economic releases and they were mixed. Leading economic indicators fell 0.1% vs the expected unchanged reading. Weekly jobless claims were 223K vs 220K. Existing home sales were 4.24M vs 4.19M. Consumer sentiment was 71.1 vs 73.2. Mortgage interest rates finished the week worse by approximately 1/8 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
|---|---|---|---|
| New Home Sales | Monday, Jan. 27, 10:00 am, et | 670K | Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
| Treasury Auctions Begin | Monday, Jan. 27, 1:15 pm, et | None | Important. 2Y and 5Y Notes on Monday, 7Y Notes on Tuesday. |
| Durable Goods Orders | Tuesday, Jan. 28, 1:15 pm, et | Up 0.8% | Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates. |
| FHFA House Price Index | Tuesday, Jan. 28, 10:00 am, et | Up 0.3% | Moderately Important. A measure of single-family house prices. Weakness may lead to lower rates. |
| Consumer Confidence | Tuesday, Jan. 28, 10:00 am, et | 106 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| Fed Meeting Adjourns | Wednesday, Jan. 29, 2:15 pm, et | No rate changes | Important. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting. |
| Q4 GDP | Thursday, Jan. 30, 8:30 am, et | Up 2.7% | Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| PCE Core Inflation | Friday, Jan. 31, 8:30 am, et | Up 0.3% | Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve. |
| Q4 Employment Cost Index | Friday, Jan. 31, 8:30 am, et | Up 1.1% | Very important. A measure of wage inflation. Weakness may lead to lower rates. |
Employment Cost Index
The employment cost index is a quarterly report issued by the Department of Labor. The report measures the growth of wages, salaries, and benefits costs over a certain period of time. Though ECI figures are usually weeks old, the data remains the best indicator of employment price pressures considering it factors employees’ total compensation.
If wage pressures become evident, higher expectations of inflation also tend to arise. However, increasing compensation does not necessarily lead to increased inflationary pressures. Oftentimes, increased productivity enables employers to increase compensation without increasing the costs of their goods or services. Be cautious heading into this release.
