![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. Rates improved Tuesday through Thursday morning with only some slight selling pressure late in the week. The data was mixed with very little price pressures. Durable goods fell 6.3% vs the expected 7.8% decline. The house price index fell 0.1% vs the expected 0.1% increase. Consumer confidence was 98 vs 87. GDP fell 0.2% vs the expected 0.3% decline. Weekly Jobless claims were 240K vs 230K. Income rose 0.8% vs 0.3%. Spending rose 0.2% as expected. Core PCE inflation rose 0.1% as expected. 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 |
|---|---|---|---|
| ISM Index | Monday, June 2, 10:00 am, et | 48.7 | Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates. |
| Construction Spending | Monday, June 2, 10:00 am, et | Up 0.3% | Low importance. An indication of economic strength. Significant weakness may lead to lower rates. |
| Factory Orders | Tuesday, June 3, 10:00 am, et | Down 3.1% | Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
| ADP Employment | Wednesday, June 4, 8:15 am, et | 120K | Important. An indication of employment. Weakness may bring lower rates. |
| Fed “Beige Book” | Wednesday, June 4, 2:00 pm, et | None | Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates. |
| Weekly Jobless Claims | Thursday, June 5, 8:30 am, et | 235K | Important. An indication of employment. Higher claims may result in lower rates. |
| Trade Data | Thursday, June 5, 8:30 am, et | $117B deficit | Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates. |
| Employment | Friday, June 6, 8:30 am, et | 4.2%, Payrolls +130K | Very important. An increase in unemployment or weakness in payrolls may bring lower rates. |
Interesting Times
There is a Chinese proverb that states, “May you live in interesting times.” It is often argued that the word interesting is meant to be a synonym for turbulent or dangerous. This phrase hits the bull’s-eye given the current state of the financial markets, continued Fed rate uncertainty, and almost daily tariff developments. It is a major understatement to say that the financial markets remain volatile.
The overwhelming consensus a few months ago regarding the Fed’s next move was that they would cut rates several times this year. Those sentiments shifted quickly as tariffs were implemented. A summer rate cut now has very little support. Current odds are 50/50 as to the Fed cutting rates at the September meeting. The Fed has difficult decisions to make. They need to keep inflation in check. However, the last thing they want to do is stifle the economic recovery they have worked so hard to produce.
Timing is the key. We will likely continue to see whipsaw trading in the months ahead. Concerted downward pressure on rates is not expected until it is very clear the Fed will pivot. Now is a great time to take advantage of rates to avoid any future spikes.
