![Mortgage Investors Group in [Dynamic1]](../assets/images/mortgage-investors-group.svg)
Market Comment
Mortgage bond prices finished the week slightly higher which put additional downward pressure on rates. The trend the past few weeks has seen continued up down trading with solid rallies each Friday morning. The MBS market generally likes to see moderate growth with very little price pressures. The data last week was mixed. ISM index was 48.4 vs 47.6. Construction spending rose 0.4% vs 0.2%. ADP employment was a weaker than expected 146K. Analysts expected a reading of 150K. Factory orders rose 0.2% as expected. The Trade deficit came in at $73.8B vs $75B. Weekly jobless claims were 224K vs 215K. Unemployment came in at 4.2% as expected. Payrolls rose 227K vs 200K. Last month the unemployment rate was 4.1%. 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 |
|---|---|---|---|
| Q3 Productivity | Tuesday, Nov. 10, 8:30 am, et | Up 2.2% | Important. A measure of output per hour. Improvement may lead to lower mortgage rates. |
| 3-year Treasury Note Auction | Tuesday, Nov. 10, 1:15 pm, et | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Consumer Price Index | Wednesday, Nov. 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, Nov. 11, 1:15 pm, et | None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| Producer Price Index | Thursday, Nov. 12, 8:30 am, et | Up 0.3%, 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, Nov. 12, 8:30 am, et | 223K | Important. An indication of employment. Higher claims may result in lower rates. |
| 30-year Treasury Bond Auction | Thursday, Nov. 12, 1:15 pm, et | None | Important. Bonds will be auctioned. Strong demand may lead to lower mortgage rates. |
Consumer Price Index
The Consumer Price Index is widely accepted as an important measure of inflation. The CPI is a measure of prices at the consumer level for a fixed basket of goods and services. The National Statistics Office and the Bureau of Agricultural Statistics of the Department of Agriculture collect price data for the computation of the CPI. Since it is an index number, it compares the level of prices to a base period. By comparing the level of the index at two different points in time, analysts can determine how much prices have risen in that period.
Unlike other measures of inflation, which only factor domestically produced goods; the CPI takes into account imported goods as well. This is important due to the ever-increasing reliance of the US economy upon imported goods. Analysts primarily focus on the core rate of the CPI which factors out the more volatile food and energy prices. Oil prices are always a concern from an inflation perspective. Inflation, real or perceived, erodes the value of fixed income securities such as mortgage bonds.
