MIG Market Watch, January 15th, 2018
Posted by : Admin
MARKET COMMENT
Mortgage bond prices finished the week sharply lower which caused rates to spike higher. The selling pressure started Tuesday and continued through the middle of the week. There were reports that China would slow or stop purchasing U.S. Treasuries. The U.S. debt market got crushed in the short term as a result of the news as China is one of the largest holders of U.S. debt instruments. Weekly jobless claims printed at 261,000 and continuing claims, a summation of all receiving benefits, at 1,867K. Claims were expected at 241,000 and continuing claims at 1,988K. Producer prices fell 0.1% and the core also fell 0.1%. Economists expected both components to rise 0.2%. Cooler inflation readings cause the Fed concern as they would like to see inflation increase along with employment. We ended the week worse by approximately 5/8 to 3/4 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Industrial Production | Wednesday, Jan. 17, 9:15 am, et |
Up 0.2% | Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates. |
| Capacity Utilization | Wednesday, Jan. 17, 9:15 am, et |
77.2% | Important. A figure above 85% is viewed as inflationary. Weaker figure may lead to lower rates. |
| NAHB Housing Index | Wednesday, Jan. 17, 10:00 am, et |
75 | Moderately Important. A measure of single family housing. Weakness may lead to lower mortgage rates. |
| Fed “Beige Book” | Wednesday, Jan. 17, 2:00 pm, et |
None | Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates. |
| Weekly Jobless Claims | Thursday, Jan.18, 8:30 am, et |
262K | Important. An indication of employment. Higher claims may result in lower rates. |
| Housing Starts | Thursday, Jan.18, 8:30 am, et |
1310K | Important. A measure of housing sector strength. Weakness may lead to lower rates. |
| Philadelphia Fed Survey | Thursday, Jan.18, 10:00 am, et |
26 | Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates. |
| 10-year Treasury TIPS Auction | Thursday, Jan.18, 1:15 pm, et |
None | Important. TIPS will be auctioned. Strong demand may lead to lower mortgage rates. |
| U of Michigan Consumer Sentiment | Friday, Jan. 19, 10:00 am, et |
96 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
NAHB INDEX
The National Association of Home Builders (NAHB) releases the Housing Market Index each month which provides an indication of single family housing market conditions. The results are derived from a survey of NAHB members in which members are asked to rate current market conditions, future market conditions, and prospective buyer traffic. The data is compiled and then a final number between 0 and 100 is released. A reading over 50 is generally considered positive. The data often correlates with the housing starts data.
The release this week may provide an early indicator to the housing starts figure Thursday assuming the two reports are in line this month.
