MIG Market Watch, January 30th, 2023


MIG Market Watch, January 30th, 2023

Posted by : Admin

Market Comment

Mortgage bond prices finished the week near unchanged which held rates flat. However, considerably volatility continued throughout the week. Rates worsened Monday and Tuesday, bounced back Wednesday and Thursday morning, and lost ground Thursday afternoon and Friday morning. The data was generally solid with very little price pressures. Leading economic indicators fell 1% vs the expected 0.7% decline. GDP rose 2.9% vs 2.6%. Durable goods rose 5.6% vs 2.9%. Weekly Jobless claims were 186K vs 205K. Personal income rose 0.2% as expected. Outlays rose 0.2% vs down 0.1%. Core PCE rose 0.3% as expected. Consumer sentiment was 64.9 vs 64.6. Mortgage interest rates finished the week with discount points near unchanged.


Looking Ahead
Economic Indicator Release Date & Time Consensus Estimate Analysis
Q4 Employment Cost Index Tuesday, January 31,
8:30 am, et
Up 1.1% Very important. A measure of wage inflation. Weakness may lead to lower rates.
FHFA House Price Index Tuesday, January 31,
10:00 am, et
Up 1.4% Moderately Important. A measure of single-family house prices. Weakness may lead to lower rates.
Consumer Confidence Tuesday, January 31,
10:00 am, et
109.0 Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
ADP Employment Wednesday, Feb. 1,
8:30 am, et
218K Important. An indication of employment. Weakness may bring lower rates.
ISM Index Wednesday, Feb. 1,
10:00 am, et
48.0 Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
Fed Meeting Adjourns Wednesday, Feb. 1,
2:15 pm, et
25 basis point hike Important. Most expect the Fed to raise rates. Volatility may surround the adjournment of this meeting.
Preliminary Q4 Productivity Thursday, Feb. 2,
8:30 am, et
Up 2.4% Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
Factory Orders Thursday, Feb. 2,
10:00 am, et
Up 0.1% Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Employment Friday, Feb. 3,
8:30 am, et
3.6%,
Payrolls +185K
Very important. An increase in unemployment or weakness in payrolls may bring lower rates.

Employment Cost Index

The employment cost index is a quarterly report issued by the Department of Labor. The report measures the growth of wages, salaries, and benefits costs over a certain period of time. Though ECI figures are usually weeks old, the data remains the best indicator of employment price pressures considering it factors employees’ total compensation.

If wage pressures become evident, higher expectations of inflation also tend to arise. However, increasing compensation does not necessarily lead to increased inflationary pressures. Oftentimes, increased productivity enables employers to increase compensation without increasing the costs of their goods or services. Be cautious heading into this release.