MIG Market Watch, September 10th, 2018
Posted by : Admin
MARKET COMMENT
Mortgage bond prices finished the week near unchanged which kept rates steady. The Institute for Supply Management (ISM) report printed at 61.3, much stronger than the expected 57.6. The trade deficit stood at $50.1B. That data was near estimates. ADP payrolls printed “cool or lower than expected” at 163K versus the expected 186K. Weekly jobless claims printed “hot” at 203K and continuing claims, a summation of all receiving benefits, at 1,707K. Expectations were for claims at 214K and continuing claims at 1,708K. Productivity in Q2/2018 rose 2.9% and unit labor costs fell 1%. That data was as expected. Unemployment was 3.9% as expected. Payrolls rose 201K versus the expected 187K increase. Mortgage interest rates finished the week unchanged.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Treasury Auctions Begin | Tuesday, Sept. 11, 1:15 pm, et |
None | Important. 3Y Tuesday, 10Y Wednesday, 30Y Thursday. Strong demand may lead to lower mortgage rates. |
| Producer Price Index | Wednesday, Sept. 12, 8:30 am, et |
Up 0.4%, Core up 0.2% |
Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates. |
| Weekly Jobless Claims | Thursday, Sept. 13, 8:30 am, et |
214K | Important. An indication of employment. Higher claims may result in lower rates. |
| Consumer Price Index | Friday, Sept. 14, 8:30 am, et |
Down 0.2%, Core down 0.1% |
Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates. |
| Retail Sales | Friday, Sept. 14, 8:30 am, et |
Up 0.5% | Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates. |
| Industrial Production | Friday, Sept. 14, 9:15 am, et |
Up 0.4% | Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates. |
| Capacity Utilization | Friday, Sept. 14, 9:15 am, et |
75.3% | Important. A figure above 85% is viewed as inflationary. Weaker figure may lead to lower rates. |
| U of Michigan Consumer Sentiment | Friday, Sept. 14, 10:00 am, et |
60.5 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
CONSUMER PRICE INDEX
The Consumer Price Index is widely accepted as the most important measure of inflation. The CPI is a measure of prices at the consumer level for a fixed basket of goods and services. The National Statistics Office and the Bureau of Agricultural Statistics of the Department of Agriculture collect price data for the computation of the CPI. Since it is an index number, it compares the level of prices to a base period. By comparing the level of the index at two different points in time, analysts can determine how much prices have risen in that period.
Unlike other measures of inflation, which only factor domestically produced goods; the CPI takes into account imported goods as well. This is important due to the ever-increasing reliance of the US economy upon imported goods. Analysts primarily focus on the core rate of the CPI which factors out the more volatile food and energy prices. Oil prices are always a concern from an inflation perspective. Inflation, real or perceived, erodes the value of fixed income securities such as mortgage bonds.
