MIG Market Watch, May 11th, 2020
Posted by : Admin
MARKET COMMENT
Mortgage bond prices finished the lower which put upward pressure on rates. Rates started the week higher Monday morning and that trend continued through Thursday. The changes were within a narrow range daily but cumulatively over the course of four days caused higher mortgage interest rates. This happened despite the fact the Fed continued to buy billions of dollars’ worth of mortgage-backed securities. Stocks looked to close the week higher by over 600 points. Factory orders fell 10.3% vs 9.7%. The trade deficit was $44.4B and in line with estimates. Weekly jobless claims were 3.169M vs the expected 2.9M. Q1 productivity fell 2.5% vs the expected 6% decline. Unemployment figures (below) continued to reflect the economic challenges of the coronavirus. Mortgage interest rates finished the week worse by 1/4 to 1/2 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Consumer Price Index | Tuesday, May 12, 8:30 am, et |
Down 0.7%, Core down 0.2% |
Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates. |
| Producer Price Index | Wednesday, May 13, 8:30 am, et |
Down 0.4%, Core down 0.1% |
Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates. |
| Weekly Jobless Claims | Thursday, May 14, 8:30 am, et |
3M | Important. An indication of employment. Higher claims may result in lower rates. |
| Retail Sales | Friday, May 15, 8:30 am, et |
Down 4% | Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates. |
| Industrial Production | Friday, May 15, 9:15 am, et |
Down 12% | Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates. |
| Capacity Utilization | Friday, May 15, 9:15 am, et |
65% | Important. A figure above 85% is viewed as inflationary. Weaker figure may lead to lower rates. |
| Business Inventories | Friday, May 15, 10:00 am, et |
Down 0.2% | Low importance. An indication of stored-up capacity. A significantly larger increase may lead to lower rates. |
| U of Michigan Consumer Sentiment | Friday, May 15, 10:00 am, et |
68 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
WEAK EMPLOYMENT
The U.S. Bureau of Labor Statistics reported Friday that “In April, the unemployment rate increased by 10.3 percentage points to 14.7 percent. This is the highest rate and the largest over-the-month increase in the history of the series (seasonally adjusted data are available back to January 1948). The number of unemployed persons rose by 15.9 million to 23.1 million in April. Total nonfarm payroll employment fell by 20.5 million in April. The changes in these measures reflect the effects of the coronavirus (COVID-19) pandemic and efforts to contain it. Employment fell sharply in all major industry sectors, with particularly heavy job losses in leisure and hospitality. This news release presents statistics from two monthly surveys. The household survey measures labor force status, including unemployment, by demographic characteristics. The establishment survey measures nonfarm employment, hours, and earnings by industry.”
