MIG Market Watch, January 24th
Posted by : Admin
Market Comment
Mortgage bond prices finished the week lower which put additional upward pressure on rates. Heavy selling pressure continued Tuesday morning as rates worsened by 5/8 of a discount point that morning alone. Inflation fears dominated trading. Oil prices hit levels not seen since 2014. The Fed continued their MBS purchases which buffered some of the rate increases. There were some slight positive movements the last portion of the week which chipped away at the earlier losses. The data was mixed. NAHB housing was 83 vs 85. Housing starts were 1702K vs the expected 1700K. Weekly jobless claims were higher than expected at 286K vs 220K. The Philadelphia Fed index was 23.2 vs 20. Leading economic indicators rose 0.8% vs 0.7%. Mortgage interest rates finished the week worse by approximately 1/4 of a discount point.
Looking Ahead
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Consumer Confidence | Tuesday, Jan. 25, 10:00 am, et |
113 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| New Home Sales | Wednesday, Jan. 26, 10:00 am, et |
770K | Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
| Fed Meeting Adjourns | Wednesday, Jan. 26, 2:15 pm, et |
No rate changes | Important. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting. |
| Durable Goods Orders | Thursday, Jan. 27, 8:30 am, et |
Down 0.2% | Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates. |
| Q4 GDP | Thursday, Jan. 27, 8:30 am, et |
Up 5.8% | Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| Personal Income and Outlays | Friday, Jan. 28, 8:30 am, et |
Up 0.4%, Up 0.1% |
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
| PCE Core Inflation | Friday, Jan. 28, 8:30 am, et |
Up 0.5% | Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve. |
| Q4 Employment Cost Index | Friday, Jan. 28, 8:30 am, et |
Up 1.2% | Very important. A measure of wage inflation. Weakness may lead to lower rates. |
| U of Michigan Consumer Sentiment | Friday, Jan. 28, 10:00 am, et |
68.8 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
Busy Week
Economic data is usually the number one reason mortgage interest rates move daily. Data is compiled from numerous sources and comes in two flavors, economic growth and inflation. Some releases are more important than others and thus are more likely to cause wider swings in mortgage rates. Rates move in relation to the deviation from expectations. We have significant releases all week. The potential for mortgage interest rate volatility is greater as a result.The recent trend has been toward higher rates. Future rate volatility is likely, so caution is key.
