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Mortgage Watch
Posted by : Moneek-2
Market Comment
Mortgage bond prices finished the week slightly higher which put some additional downward pressure on rates. Rates traded within a narrow range to start the week, improved sharply mid-week, and worsened slightly toward the end. The Middle East ceasefire tempered some of the inflation concerns tied to skyrocketing oil prices. The data was mixed. Durable goods fell 1.4% vs the expected 0.5% increase. Weekly ADP employment rose 26K vs 15K. Personal income fell 0.1% vs the expected 0.3% increase. Outlays rose 0.5% as expected. Core PCE inflation rose 0.4% as expected. GDP was up 0.5% vs 0.7%. CPI rose 0.9% as expected. The core rose 0.2% vs 0.3%. Mortgage interest rates finished the week better by 1/8 to 1/4 of a discount point.
Looking Ahead
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Existing Home Sales | Monday, April 13, 10:00 am, et | 4.01M | Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates. |
| Weekly ADP Employment | Tuesday, April 14, 8:30 am, et | 20K | Important. An indication of employment. Weakness may bring lower rates. |
| Producer Price Index | Tuesday, April 14, 8:30 am, et | Up 1.2%, Core up 0.5% | Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates. |
| NAHB Housing Index | Wednesday, April 15, 10:00 am, et | U37 | Moderately Important. A measure of single-family housing. Weakness may lead to lower mortgage rates. |
| Fed “Beige Book” | Wednesday, April 15, 2:00 pm, et | None | Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates. |
| Philadelphia Fed Survey | Thursday, April 16, 10:00 am, et | 38 | Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates. |
| Industrial Production | Thursday, April 16, 9:15 am, et | Up 0.1% | Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
| Capacity Utilization | Thursday, April 16, 9:15 am, et | 76.4% | Important. A figure above 85% is viewed as inflationary. Weakness may lead to lower rates. |
Philadelphia Fed
Federal Reserve Banks were created to control the central banking system of the United States. The banks are divided into 12 districts and facilitate the monetary system by moving currency in and out of circulation in accordance with the policies set by the Federal Open Market Committee. The Reserve Banks handle check processing, hold cash reserves, and make loans to depository institutions. Each Reserve Bank regulates commercial banks in their district. The twelve districts include Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. The Philadelphia Fed report is a survey of manufacturing businesses in the Northeast region.
The report is valuable due to the timing. It is released before the month is over and is the second regional report released. While there are many other regional reports throughout the month the Philadelphia Fed report is considered the most valuable. It has historically shown strong correlation with purchasing managers index data and therefore analysts give it considerable attention.
