![Mortgage Investors Group in [Dynamic1]](../assets/images/mortgage-investors-group.svg)
Market Comment
Mortgage bond prices finished the week slightly lower which put a little upward pressure on rates. Equities trended higher as the Fed cut rates to spur the economy. Fed Chair Powell warned of inflation concerns tied to tariffs in his post-meeting address. Inflation, real or perceived, erodes the value of fixed income investments such as MBSs which causes prices to fall and rates to rise. The data was mixed. Retail sales beat estimates with an increase of 0.6% vs 0.2%. Industrial production rose 0.1% vs the expected 0.1% decrease. Capacity use was 77.4% as expected. NAHB housing was 32 vs 33. Housing starts were 1.307M vs 1.37M. LEI fell 0.5% vs the expected 0.2% decline. 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 |
| Treasury Auctions Begin | Tuesday, Sept. 23, 1:15 pm, et | None | Important. 2Y Notes on Tuesday, 5Y Notes on Wednesday, and 7Y Notes on Thursday. |
| New Home Sales | Wednesday, Sept. 24, 10:00 am, et | 650K | Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
| Durable Goods Orders | Thursday, Sept. 25, 8:30am, et | Down 0.5% | Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates. |
| Q2 GDP | Thursday, Sept. 25, 8:30am, et | Up 2% | Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| Weekly Jobless Claims | Thursday, Sept. 25, 8:30am, et | 230K | Important. An indication of the employment situation. Weakness may lead to lower rates. |
| Existing Home Sales | Thursday, Sept. 25, 10:00 am, et | 3.98M | Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates. |
| Personal Income and Outlays | Friday, Sept. 26, 8:30 am, et | Up 0.3%, Up 0.4% | Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
| PCE Core Inflation | Friday, Sept. 26, 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, Sept. 26, 10:00 am, et | 55.4 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
PCE
The US Department of Commerce’s Bureau of Economic Analysis releases the core PCE price index. The report provides the average increase in costs for personal consumption expenditures. PCE is significant in that the Fed uses it in determining inflation as opposed to the prior use of the consumer price index. The PCE includes the price of spending for and on behalf of households. This includes health care spending paid for a household by a business. The CPI only reflects out of pocket expenses paid directly by consumers. The Fed continues to state that inflation tied to tariffs is a significant concern.
Be cautious heading into the release. Data can surprise the financial markets from time to time. Mortgage interest rates will likely spike higher in the short term if the PCE core reading is higher than expected. A reading in line with expectations will likely help rates stay in check.
