MIG Market Watch, December 6th 2021
Posted by : Admin
MARKET COMMENT
Mortgage bond prices finished the week lower which put upward pressure on rates. Fed Chair Powell indicated it was time to remove the “transitory” inflation descriptor. Market participants prepared for additional Fed tapering of Treasury and MBS purchases in the months ahead. The Fed Beige Book reported “Prices rose at a moderate to robust pace, with price hikes widespread across sectors of the economy.” Stocks experienced wild swings as coronavirus variants threatened economic recovery. This resulted in more financial uncertainty. The data was mixed. Weekly jobless claims were 222K vs 235K. Unemployment came in at 4.2% vs 4.5%. However, the payrolls component was weaker than expected at +210K vs +550K. Mortgage interest rates finished the week worse by approximately 1/8 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Trade Data | Tuesday, Dec. 7, 8:30 am, et |
$66.8B deficit | Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates. |
| Revised Q3 Productivity | Tuesday, Dec. 7, 8:30 am, et |
Up 2.4% | Important. A measure of output per hour. Improvement may lead to lower mortgage rates. |
| Treasury Auctions Begin | Tuesday, Dec. 7, 1:15 pm, et |
None | Important. 3Y Notes on Tuesday, 10Y Notes on Wednesday, and 30Y Notes on Thursday. |
| Consumer Credit | Tuesday, Dec. 7, 3:00 pm, et |
$29.9B | Low importance. A significantly large increase may lead to lower mortgage interest rates. |
| Weekly Jobless Claims | Thursday, Dec. 9, 8:30 am, et |
205K | Important. An indication of employment. Higher claims may result in lower rates. |
| Consumer Price Index | Friday, Dec. 10, 8:30 am, et |
Up 0.6%, Core up 0.4% |
Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates. |
| U of Michigan Consumer Sentiment | Friday, Dec. 10, 10:00 am, et |
72.4 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
Consumer Sentiment
In the US the consumer is often seen as the driving force of the economy. A large percentage of the total economic output is for personal use. Analysts attempt to predict the future spending patterns of consumers to gauge economic activity.
The Michigan consumer sentiment index is one piece of data used to measure consumer attitudes. The index is derived from a telephone survey, which gathers information on consumer expectations of the overall economy. The preliminary report is released around the 10th of each month and then is revised throughout the remainder of the month. It is significant in that it provides a precursor into consumers’ willingness to spend in the months ahead. However, many analysts point out that willingness to spend does not always convert to actual expenditures. As the economy moves forward, housing prices escalate, and energy prices experience volatility, American consumers continue to spend. However, any jolts amid the holiday season could cause concern. Look for any variation from estimates in the consumer data this week to cause mortgage interest rate volatility. Signs of eroding consumer confidence could lead to improvements in mortgage interest rates. However, stronger than expected figures could spike rates higher.
