Mortgage bond prices finished the week sharply lower which caused mortgage interest rates to surge higher. Elevated inflation, uncertainty in the Middle East, and the Fed\u2019s continued quantitative tightening factored heavily into trading. The data was mixed but still showed pockets of economic strength. Retail sales rose 0.7% vs 0.3%. Industrial production rose 0.3% vs the expected unchanged reading. Capacity use was 79.7 vs 79.5. Business inventories rose 0.4% vs 0.3%. Housing starts were 1358K vs 1380K. Weekly jobless claims were 198K vs 212K. The Philadelphia Fed index fell 9 vs the expected 6.4 decrease. The Fed Beige Book report indicated prices continued to increase at a modest pace overall. Mortgage interest rates finished the week worse by approximately 2 full discount points.<\/p>\n
Economic <\/strong>Indicator<\/strong><\/td>\n| Release <\/strong>Date & Time<\/strong><\/td>\n | Consensus <\/strong>Estimate<\/strong><\/td>\n | Analysis<\/strong><\/td>\n<\/tr>\n | 2-year Treasury Note Auction<\/td>\n | Tuesday, Oct. 24, | \n1:15 pm, et<\/td>\n None<\/td>\n | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.<\/td>\n<\/tr>\n | New Home Sales<\/td>\n | Wednesday, Oct. 25, | \n10:00 am, et<\/td>\n 679K<\/td>\n | Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.<\/td>\n<\/tr>\n | 5-year Treasury Note Auction<\/td>\n | Wednesday, Oct. 25, | \n1:15 pm, et<\/td>\n None<\/td>\n | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.<\/td>\n<\/tr>\n | Weekly Jobless Claims<\/td>\n | Thursday, Oct. 26, | \n8:30 am, et<\/td>\n 200K<\/td>\n | Important. An indication of employment. Higher claims may result in lower rates.<\/td>\n<\/tr>\n | Durable Goods Orders<\/td>\n | Thursday, Oct. 26, | \n8:30 am, et<\/td>\n Up 0.6%<\/td>\n | Important. An indication of the demand for \u201cbig ticket\u201d items. Weakness may lead to lower rates.<\/td>\n<\/tr>\n | Q3 GDP<\/td>\n | Thursday, Oct. 26, | \n8:30 am, et<\/td>\n Up 4.1%<\/td>\n | Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.<\/td>\n<\/tr>\n | Personal Income and Outlays<\/td>\n | Friday, Oct. 27, | \n8:30 am, et<\/td>\n Up 0.4%, | \nUp 0.3%<\/td>\n Important. A measure of consumers\u2019 ability to spend. Weakness may lead to lower mortgage rates.<\/td>\n<\/tr>\n | PCE Core Inflation<\/td>\n | Friday, Oct. 27, | \n8:30 am, et<\/td>\n Up 0.3%<\/td>\n | Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve.<\/td>\n<\/tr>\n | U of Michigan Consumer Sentiment<\/td>\n | Friday, Oct. 27, | \n10:00 am, et<\/td>\n 63<\/td>\n | Important. An indication of consumers\u2019 willingness to spend. Weakness may lead to lower mortgage rates.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n | \n Powell Speech<\/h5>\nFed Chair Powell stated last week that, \u201cInflation readings turned lower over the summer, a very favorable development. The September inflation data continued the downward trend but were somewhat less encouraging. Shorter-term measures of core inflation over the most recent three and six months are now running below 3 percent. But these shorter-term measures are often volatile. In any case, inflation is still too high, and a few months of good data are only the beginning of what it will take to build confidence that inflation is moving down sustainably toward our goal. We cannot yet know how long these lower readings will persist, or where inflation will settle over coming quarters. While the path is likely to be bumpy and take some time, my colleagues and I are united in our commitment to bringing inflation down sustainably to 2 percent.\u201d He concluded with, \u201cA range of uncertainties, both old and new, complicate our task of balancing the risk of tightening monetary policy too much against the risk of tightening too little. Doing too little could allow above-target inflation to become entrenched and ultimately require monetary policy to wring more persistent inflation from the economy at a high cost to employment. Doing too much could also do unnecessary harm to the economy.<\/p>\n Given the uncertainties and risks, and how far we have come, the Committee is proceeding carefully.\u201d Borrowers would be prudent to mirror the Fed\u2019s cautious approach.<\/p>\n","protected":false},"excerpt":{"rendered":" Market Comment Mortgage bond prices finished the week sharply lower which caused mortgage interest rates to surge higher. Elevated inflation, uncertainty in the Middle East, and the Fed\u2019s continued quantitative tightening factored heavily into trading. The data was mixed but still showed pockets of economic strength. Retail sales rose 0.7% vs 0.3%. Industrial production rose … Continue reading MIG Market Watch, October 23rd, 2023<\/span> |