![Mortgage Investors Group in [Dynamic1]](../assets/images/mortgage-investors-group.svg)
Market Comment
Mortgage bond prices finished the week higher which put downward pressure on rates. The MBS market was quiet most of the week and rallied Friday morning tied to weak payrolls data. The other data was mixed. ISM Index was 48.7 vs 49. Factory orders fell 1.3% vs the expected 1.4% decline. ADP employment came in with a weaker reading of 54K vs 65K. Productivity rose 3.3% vs 2.7%. The trade deficit was $78.3B vs $75.7B. The Fed Beige Book reported activity in the United States saw “little or no change” and many areas saw “moderate or modest” price increases. The Fed noted “many Districts reporting that tariffs were especially impactful on the prices of inputs.” Mortgage interest rates finished the week better by approximately 3/8 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| 3-year Treasury Note Auction | Tuesday, Sept. 9, 1:15 pm, et | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Producer Price Index | Wednesday, Sept. 10, 8:30 am, et | Up 0.3%, Core up 0.3% | Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates. |
| 10-year Treasury Note Auction | Wednesday, Sept. 10, 1:15 pm, et | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Consumer Price Index | Thursday, Sept. 11, 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. |
| Weekly Jobless Claims | Thursday, Sept. 11, 8:30 am, et | 240K | Important. An indication of employment. Higher claims may result in lower rates. |
| 30-year Treasury Bond Auction | Thursday, Sept. 11, 1:15 pm, et | None | Important. Bonds will be auctioned. Strong demand may lead to lower mortgage rates. |
| U of Michigan Consumer Sentiment | Friday, Sept. 12, 10:00 am, et | 59.2 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
Employment Results
The U.S. Bureau of Labor Statistics releases the Employment Situation Summary each month commonly referred to as the Employment Report. The summary “presents statistics from two monthly surveys. The household survey measures labor force status, including unemployment, by demographic characteristics. The establishment survey measures nonfarm employment, hours, and earnings by industry.”
The release last Friday showed, “Total nonfarm payroll employment changed little in August (+22,000) and has shown little change since April.” In addition, “The unemployment rate, at 4.3 percent, also changed little in August. A job gain in health care was partially offset by losses in federal government and in mining, quarrying, and oil and gas extraction.” Analysts expected payrolls to increase 75,000 and the unemployment rate at 4.3 percent.
The short-term reaction was very positive for mortgage interest rates as mortgage-backed securities prices rose and rates fell Friday morning. The significant weakness on the payrolls side solidified market sentiment that the Fed will cut rates September 17th. The Fed cuts rates to spur economic growth. We could see some additional downward pressure on rates in the short term but that will be predicated on tame inflation readings, so caution is key.
