![Mortgage Investors Group in [Dynamic1]](../assets/images/mortgage-investors-group.svg)
Market Comment
Mortgage bond prices finished the week higher which put a little downward pressure on rates. Rates remained steady through the beginning of the week, fell Wednesday afternoon, and pushed a little higher toward the end of the week. The Fed kept rates unchanged and signaled the possibility of two rate cuts sometime this year. Some of the data showed signs of weakness. Retail sales rose 0.2% vs 0.6%. NAHB housing was 39 vs 43. Industrial production rose 0.7% vs 0.2%. Capacity use was 78.2% vs 77.8%. Housing starts were 1.501M vs 1.38M. Existing home sales were 4.26M vs 3.95M. Weekly jobless claims were 223K vs 224K. Philadelphia Fed was 5.6 vs 15. Mortgage interest rates finished the week better by approximately 1/4 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
|---|---|---|---|
| FHFA House Price Index | Tuesday, March 25, 10:00 am, et | Up 0.8% | Moderately Important. A measure of single-family house prices. Weakness may lead to lower rates. |
| Consumer Confidence | Tuesday, March 25, 10:00 am, et | 98.2 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| New Home Sales | Tuesday, March 25, 10:00 am, et | 725K | Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
| Durable Goods Orders | Wednesday, March 26, 8:30 am, et | Up 3.1% | Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates. |
| Q4 GDP | Thursday, March 27, 8:30 am, et | Up 2.3% | Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| Personal Income and Outlays | Friday, March 28, 8:30 am, et | Up 0.6%, Up 0.3% | Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
| PCE Core Inflation | Friday, March 28, 8:30 am, et | Up 0.3% | Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve. |
| U of Michigan Consumer Sentiment | Friday, March 28, 10:00 am, et | 57.9 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
Durable Goods Orders
Durable goods orders are generally believed to be a precursor of activity in the manufacturing sector because manufacturing must have an order before considering an increase in production. Conversely, a decrease in orders eventually causes production to be scaled back; otherwise the manufacturer accumulates inventories, which must be financed.
Unfortunately, durable goods orders data has many drawbacks. The first problem with the orders data is that they are extremely volatile. The volatility of the data usually is attributed to the civilian aircraft and defense components of the figure. For example, if Boeing has a big order for one of its jumbo jets, the civilian aircraft category can change by $3-4 billion. The same scenario is evident when an aircraft carrier is ordered, surges in the defense category result. The second problem with the data is that orders are continuously being revised. Be cautious heading into the data.
