![Mortgage Investors Group in [Dynamic1]](../assets/images/mortgage-investors-group.svg)
Market Comment
Mortgage bond prices finished the week near unchanged which left rates flat. The MBS market was calm to start the week, improved slightly mid-week, and sold off Friday tied to the employment report. The data was mixed with some price pressures. ISM Index was 48.5 vs 49.5. Factory orders were down 3.7 vs down 3.0. ADP employment rose 37K vs the expected 115K increase. The Federal Reserve’s Beige Book noted a slight decline in economic activity and a mixed outlook across districts. Weekly jobless claims were 247K vs 235K. The trade deficit was $61.6B vs $94B. Mortgage interest rates finished the week with discount points near unchanged.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
|---|---|---|---|
| 3-year Treasury Note Auction | Tuesday, June 10, 1:15 pm, et | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Consumer Price Index | Wednesday, June 11, 8:30 am, et | Up 0.2%, Core up 0.3% | Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates. |
| 10-year Treasury Note Auction | Wednesday, June 11, 1:15 pm, et | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Producer Price Index | Thursday, June 12, 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. |
| Weekly Jobless Claims | Thursday, June 12, 8:30 am, et | 239K | Important. An indication of employment. Higher claims may result in lower rates. |
| 30Y Treasury Bond Auction | Thursday, June 12, 1:15 pm, et | None | Important. Bonds will be auctioned. Strong demand may lead to lower mortgage rates. |
| U of Michigan Consumer Sentiment | Friday, June 13, 10:00 am, et | 53.5 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
No Fed Pivot in Sight
The Fed is clear they will not pivot from keeping rates higher until the data shows signs the economy needs a boost and inflation remains in check. The US Bureau of Labor Statistics Employment Situation Summary is the most important economic release each month. Last week’s report pushed back against the argument the Fed will pivot any time soon.
The household survey indicated, “The unemployment rate held at 4.2 percent in May and has remained in a narrow range of 4.0 percent to 4.2 percent since May 2024. The number of unemployed people, at 7.2 million changed little over the month.”
The establishment survey reported, “Total nonfarm payroll employment increased by 139,000 in May, similar to the average monthly gain of 149,000 over the prior 12 months. In May, employment continued to trend up in health care, leisure and hospitality, and social assistance. Federal government continued to lose jobs.”
The higher-than-expected payrolls component gained most of the focus and caused mortgage interest rates to push higher Friday morning. If future economic releases show economic weakness we could see the recent upward trend reverse. However, any additional signs of strength will likely result in volatility. A cautious approach to float/lock decisions is prudent in the weeks and months ahead.
