MIG Market Watch, May 29th, 2023
Posted by : Admin
Market Comment
Mortgage bond prices finished the week sharply lower which put significant upward pressure on rates. We started negatively and continued that direction most of the week. US debt ceiling limits and continued regional bank failure concerns impacted rates. The Federal Reserve reported that withdraws across US banks increased the past few weeks with the effects of various regional banks continuing to ripple through the economy. The Fed minutes showed “inflation could continue to be more persistent than expected.” The data did not help. New home sales were 683M vs 665M. Durable goods rose 1.1% vs down 1%. Income rose 0.4% as expected. Spending rose 0.8% vs 0.4%. Core PCE inflation rose 0.4% vs 0.3%. Mortgage interest rates finished the week worse by approximately 7/8 of a discount point.
Looking Ahead
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| FHFA House Price Index | Tuesday, May 30, 10:00 am, et |
Up 0.4% | Moderately Important. A measure of single-family house prices. Weakness may lead to lower rates. |
| Consumer Confidence | Tuesday, May 30, 10:00 am, et |
100 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| Fed “Beige Book” | Wednesday, May 31, 2:00 pm, et |
None | Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates. |
| ADP Employment | Thursday, June 1, 8:15 am, et |
288K | Important. An indication of employment. Weakness may bring lower rates. |
| Weekly Jobless Claims | Thursday, June 1, 8:30 am, et |
232K | Important. An indication of employment. Higher claims may result in lower rates. |
| ISM Index | Thursday, June 1, 10:00 am, et |
47 | Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates. |
| Employment | Friday, June 2, 8:30 am, et |
3.5%, Payrolls +180K |
Very important. An increase in unemployment or weakness in payrolls may bring lower rates. |
Consumer Confidence
The Conference Board releases the Consumer Confidence Index on the last Tuesday of every month. The report details the levels of confidence individual households have in the performance of the economy. The data is derived from a survey of 5,000 households nationwide. The survey polls consumer opinions on current business conditions, their jobs, their incomes, and their future spending plans. The Conference Board is a non-profit group that has produced the data since 1967.
The consumer confidence index is significant in that it provides a precursor into the willingness of consumers to spend in the months ahead. Consumers are vital to the US economy as consumer spending is a large portion of the gross domestic product. Manufacturers attempt to gauge consumer spending and adjust production accordingly. The challenge that many analysts note is the fact that a consumer’s willingness to spend does not always convert to an actual expenditure.
Be cautious heading into economic releases in the days ahead. Signs of strength will likely push rates higher. However, significant weakness could reverse the recent trend.
