![Mortgage Investors Group in [Dynamic1]](../assets/images/mortgage-investors-group.svg)
Market Comment
Mortgage bond prices finished the week lower which put upward pressure on rates. Rates worsened Monday and Tuesday, recovered mid-week, and closed on a negative note. Stocks rebounded as news focused on tariff deals with the U.K. The Fed left rates unchanged and noted “risks of higher unemployment and higher inflation have risen.” Chair Powell assured the Nation that “despite heightened uncertainty, the economy is still in a solid position. The unemployment rate remains low, and the labor market is at or near maximum employment.” The trade deficit was $140.5B vs $137B. Weekly jobless claims were 228K vs 230K. Mortgage interest rates finished the week worse by approximately 1/4 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
|---|---|---|---|
| Consumer Price Index | Tuesday, May 13, 8:30 am, et | Up 0.3%, Core up 0.3% | Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates. |
| Producer Price Index | Thursday, May 15, 8:30 am, et | Up 0.2%, Core up 0.3% | Important. An indication of inflationary pressures at the producer level. Lower figures may lead to lower rates. |
| Retail Sales | Thursday, May 15, 8:30 am, et | Up 0.1% | Important. A measure of consumer demand. Weakness may lead to lower mortgage rates. |
| Industrial Production | Thursday, May 15, 9:15 am, et | Up 0.1% | Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
| Capacity Utilization | Thursday, May 15, 9:15 am, et | 77.8% | Important. A figure above 85% is viewed as inflationary. Weakness may lead to lower rates. |
| NAHB Housing Index | Thursday, May 15, 10:00 am, et | 41 | Moderately Important. A measure of single-family housing. Weakness may lead to lower mortgage rates. |
| Housing Starts | Friday, May 16, 8:30 am, et | 1.36M | Important. A measure of housing sector strength. Weakness may lead to lower rates. |
| U of Michigan Consumer Sentiment | Friday, May 16, 10:00 am, et | 53 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
Retail Sales
Retail sales data is the first indication of weakness or strength in consumer spending released each month. The Bureau of the Census of the US Department of Commerce provides information on how much the consumer spends on the purchase of goods. This data provides the consumption part of the gross domestic product. Retail sales data represents merchandise sold for cash or credit by retailers. Durable goods, such as autos, make up 35% of the figure. The balance consists of non-durables such as gasoline, restaurants, and general merchandise. There are several drawbacks to the report. The data covers purchases of goods only, not services. It is also not adjusted for inflation and is extremely volatile.
Economists are concerned that the current economic uncertainty, higher interest rates, and recessionary fears will curtail consumer spending. The data this week will provide a good picture of how the tariffs are impacting consumer purchases. Signs of tame inflation and weak consumer spending could help rates improve. However, signs that inflation remains high and consumer spending remains strong could push rates higher. A cautious approach to float/lock decisions is prudent.
