MIG Market Watch, April 6th, 2020
Posted by : Admin
MARKET COMMENT
Mortgage bond prices finished the week slightly higher which put a little downward pressure on rates. The Fed dominated trading and overshadowed all the data releases. The Fed backed off the massive buying but continued billions of dollars of purchases daily. ADP employment fell 27K. Analysts expected a 175K decrease. Most news reports attributed the miss to the timing of the survey in relation to when companies started all the furloughs. Weekly jobless claims surged to a record 3.283M. Analysts expected 525K claims. ISM Index was 49.1 vs the expected 43.3. Weekly jobless claims were 6.648M vs the expected 3.5M. Unemployment was 4.4% vs 4%. Payrolls fell 701K. Analysts expected a 125K decrease. Mortgage interest rates finished the week better by approximately 1/4 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| 3-year Treasury Note Auction | Monday, April 6, 1:15 pm, et |
None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| 10-year Treasury Note Auction | Tuesday, April 7, 1:15 pm, et |
None | Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates. |
| 30-year Treasury Bond Auction | Wednesday, April 8, 1:15 pm, et |
None | Important. Bonds will be auctioned. Strong demand may lead to lower mortgage rates. |
| Producer Price Index | Thursday, April 9, 8:30 am, et |
Down 0.4%, Core up 0.1% |
Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates. |
| Weekly Jobless Claims | Thursday, April 9, 8:30 am, et |
9.6M | Important. An indication of employment. Higher claims may result in lower rates. |
| U of Michigan Consumer Sentiment | Thursday, April 9, 10:00 am, et |
95.0 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| Consumer Price Index | Friday, April 10, 8:30 am, et |
Down 0.1%, Core up 0.1% |
Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates. |
FED STRUCTURE
The Federal Open Market Committee (FOMC) consists of twelve members–the seven members of the Board of Governors of the Federal Reserve System who are appointed by the President to staggered 14-year terms; the president of the Federal Reserve Bank of New York; and four of the remaining eleven Reserve Bank presidents, who serve one-year terms on a rotating basis. The rotating seats are filled from the following four groups of Banks, one Bank president from each group: Boston, Philadelphia, and Richmond; Cleveland and Chicago; Atlanta, St. Louis, and Dallas; and Minneapolis, Kansas City, and San Francisco. Nonvoting Reserve Bank presidents attend the meetings of the Committee, participate in the discussions, and contribute to the Committee’s assessment of the economy and policy options.
The FOMC holds eight regularly scheduled meetings per year. At these meetings, the Committee reviews economic and financial conditions, determines the appropriate stance of monetary policy, and assesses the risks to its long-run goals of price stability and sustainable economic growth. The Fed members are not required to serve all 14 years, and some retire or resign early as we have seen lately. Jerome Powell took over as chair for Janet when she retired despite her appointment extending into 2024. The makeup of the Fed is important because it is the most powerful financial institution in the world and is a huge factor in mortgage interest rates.
