![Mortgage Investors Group in [Dynamic1]](../assets/images/mortgage-investors-group.svg)
Market Comment
Mortgage bond prices finished the week flat which held rates steady. We started negatively, had some positive mid-week movements, and closed the week on a slightly negative note. The Fed remains clear that they are “data dependent” and tame inflation readings make it possible for them to possibly pause their rate hikes. The inflation data generally showed only moderate price pressures. Consumer prices rose 0.4% as expected. The core, which excludes volatile food and energy, rose 0.4% as expected. Producer prices rose 0.2% vs 0.3%. The core rose 0.2% as expected. Weekly jobless claims were 264K vs 245K. Consumer sentiment was 57.7 vs 63. Mortgage interest rates finished the week unchanged despite continued up and down movements.
Looking Ahead
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Retail Sales | Tuesday, May 16, 8:30 am, et |
Up 0.7% | Important. A measure of consumer demand. Weakness may lead to lower mortgage rates. |
| Industrial Production | Tuesday, May 16, 9:15 am, et |
Unchanged | Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
| Capacity Utilization | Tuesday, May 16, 9:15 am, et |
79.7% | Important. A figure above 85% is viewed as inflationary. Weakness may lead to lower rates. |
| NAHB Housing Index | Tuesday, May 16, 10:00 am, et |
45 | Moderately Important. A measure of single-family housing. Weakness may lead to lower mortgage rates. |
| Housing Starts | Wednesday, May 17, 8:30 am, et |
1.4M | Important. A measure of housing sector strength. Weakness may lead to lower rates. |
| Weekly Jobless Claims | Thursday, May 18, 8:30 am, et |
244K | Important. An indication of employment. Higher claims may result in lower rates. |
| Philadelphia Fed Survey | Thursday, May 18, 10:00 am, et |
Down 1.5 | Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates. |
| Leading Economic Indicators | Thursday, May 18, 10:00 am, et |
Down 0.7% | Important. An indication of future economic activity. Weakness may lead to lower rates. |
Industrial Production
The Federal Reserve releases the Industrial Production report each month. It is a real measure of output from manufacturing, mining, electric, and gas utilities. The data is significant in that it provides an indicator of the state of the economy. Analysts use the data to attempt to determine market direction. The Fed uses the data to help set the course for monetary policy. Generally, the Fed likes to see steady growth in the economy with little price pressures. They signaled to the market for some time that they are data dependent and will continue to keep rates low to spur economic growth amid the pandemic.
Mortgage interest rates usually react favorably to weaker than expected industrial production data. In times of economic weakness investors often move out of stocks and into mortgage bonds. When things look good investors often move out of bonds and back into stocks.
The Fed remains “data dependent” regarding future rate adjustment policy. A cautious approach to float/lock decisions is prudent heading into economic releases.
