MIG Market Watch, May 4th, 2020
Posted by : Admin
MARKET COMMENT
Mortgage bond prices finished the week near unchanged which kept rates relatively flat. Rates started the week higher Monday morning as the Fed announced additional reductions in their billion-dollar MBS tentative purchase schedule. The negative trend did not last long as positive movements Tuesday erased the earlier losses. Consumer confidence was 86.9 vs the expected 86.5. Q1 GDP fell 4.8% versus the expected 4.3% decline. Weekly jobless claims were 3.839M vs the expected 3.05M. Personal income fell 2% vs the expected 1.5% decrease. Spending fell 7.5%. The expected decline was 3.8%. Core PCE inflation fell 0.1% vs the expected 0.1% increase. Q1 employment cost index rose 0.8%. Analysts looked for a reading of 0.6%. Mortgage interest rates finished the week near unchanged.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Factory Orders | Monday, May 4, 10:00 am, et |
Down 9.5% | Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
| Trade Data | Tuesday, May 5, 8:30 am, et |
$38B deficit | Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates. |
| ADP Employment | Wednesday, May 6, 8:30 am, et |
Down 13M | Important. An indication of employment. Weakness may bring lower rates. |
| Weekly Jobless Claims | Thursday, May 7, 8:30 am, et |
3.9M | Important. An indication of employment. Higher claims may result in lower rates. |
| Preliminary Q1 Productivity | Thursday, May 7, 8:30 am, et |
Down 5.4% | Important. A measure of output per hour. Improvement may lead to lower mortgage rates. |
| Consumer Credit | Thursday, May 7, 3:00 pm, et |
$15B | Low importance. A significantly large increase may lead to lower mortgage interest rates. |
| Employment | Friday, May 8, 8:30 am, et |
14%, Payrolls -20M |
Very important. An increase in unemployment or weakness in payrolls may bring lower rates. |
WEAK GDP
The Bureau of Economic Analysis indicated, “Real gross domestic product (GDP) decreased at an annual rate of 4.8 percent in the first quarter of 2020, according to the “advance” estimate. In the fourth quarter of 2019, real GDP increased 2.1 percent.
The decrease in real GDP in the first quarter reflected negative contributions from personal consumption expenditures (PCE), nonresidential fixed investment, exports, and private inventory investment that were partly offset by positive contributions from residential fixed investment, federal government spending, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, decreased.
The decrease in PCE reflected decreases in services, led by health care, and goods, led by motor vehicles and parts. The decrease in nonresidential fixed investment primarily reflected a decrease in equipment, led by transportation equipment. The decrease in exports primarily reflected a decrease in services, led by travel.
Current-dollar GDP decreased 3.5 percent, or $191.2 billion, in the first quarter to a level of $21.54 trillion. In the fourth quarter, GDP increased 3.5 percent, or $186.6 billion.”
