MIG Market Watch, June 1st, 2020
Posted by : Admin
MARKET COMMENT
Mortgage bond prices finished the week near unchanged which kept rates relatively flat. The Fed’s tentative buying amounts reduced again but this time very slightly and they generally kept rates steady throughout most of the week. The prior week we looked at $4.545B purchased daily and last week it appeared to be around $4.23B. The FHFA house price index was up 0.1% as expected. Weekly jobless claims were 2.123M, expected 2M. Durable goods fell 17.2% vs an expected 20% decline. GDP fell 5.0%. Analysts looked for a 4.8% decline. Spending fell 13.6% vs an expected 12.5% decline. Core PCE prices fell 0.4% vs a 0.3% decline. Consumer sentiment was 72.3, expected 73.7. Mortgage interest rates finished the week unchanged to better by 1/8 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| ISM Index | Monday, June 1, 10:00 am, et |
37 | Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates. |
| Construction Spending | Monday, June 1, 10:00 am, et |
Down 5.3% | Low importance. An indication of economic strength. Significant weakness may lead to lower rates. |
| ADP Employment | Wednesday, June 3, 8:30 am, et |
Down 9M | Important. An indication of employment. Weakness may bring lower rates. |
| Factory Orders | Wednesday, June 3, 10:00 am, et |
Down 14.5% | Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
| Weekly Jobless Claims | Thursday, June 4, 8:30 am, et |
Down 2.5M | Important. An indication of employment. Higher claims may result in lower rates. |
| Q1 Productivity | Thursday, June 4, 8:30 am, et |
Down 2.5% | Important. A measure of output per hour. Improvement may lead to lower mortgage rates. |
| Trade Data | Thursday, June 4, 8:30 am, et |
$41B deficit | Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates. |
| Employment | Friday, June 5, 8:30 am, et |
19.9%, Payrolls -7.5M |
Very important. An increase in unemployment or weakness in payrolls may bring lower rates. |
| Consumer Credit | Friday, June 5, 8:30 am, et |
$15B | Low importance. A significantly large increase may lead to lower mortgage interest rates. |
ADP EMPLOYMENT
The ADP employment report is a measure of employment derived from data of roughly 500,000 US businesses. The survey focuses on the private sector of the economy. In contrast, the Bureau of Labor Statistics releases the regular employment report which includes both private and government employment statistics.
The Fed is usually focused on inflation. Tightening employment conditions can result in wage inflation. The ADP report provides solid data on these conditions. Despite this, the data can still diverge from the regular employment report. The employment report is derived from a household survey and an establishment survey. These surveys often differ from one another and from the ADP employment report in that they are based on different data sets.
