MIG Market Watch, March 18th, 2019
Posted by : Darin
MARKET COMMENT
Mortgage bond prices finished the week near unchanged which kept rates steady. Back and forth trading was within a narrow range. Changes were limited to 1/8 of a discount point up and down most days. Many of the January economic reports were released due to the extended government shutdown. Retail sales showed strength in the first month. Consumer prices rose 0.2% as expected. The core was up 0.1% versus an expected 0.2% increase. Producer prices rose 0.1% versus an expected 0.3% increase. The core also rose 0.1% versus an expected 0.2% increase. Weekly jobless claims were in line with estimates at 229K. Consumer sentiment was a stronger than expected 97.9. Mortgage interest rates finished the week with discount points unchanged to better by 1/8.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate |
Analysis |
| NAHB Housing Index | Monday, March 18, 10:00 am, et |
63 | Moderately Important. A measure of single-family housing. Weakness may lead to lower mortgage rates. |
| Fed Meeting Adjourns | Wednesday, March 20, 2:15 pm, et |
No rate changes | Important. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting. |
| Weekly Jobless Claims | Thursday, March 21, 8:30 am, et |
225K | Important. An indication of employment. Higher claims may result in lower rates. |
| Philadelphia Fed Survey | Thursday, March 21, 10:00 am, et |
-3.8 | Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates. |
| Leading Economic Indicators | Thursday, March 21, 10:00 am, et |
Down 0.2% | Important. An indication of future economic activity. A smaller increase may lead to lower rates. |
| 10-year Treasury TIPS Auction | Thursday, March 21, 1:15 pm, et |
None | Important. TIPS will be auctioned. Strong demand may lead to lower mortgage rates. |
| Existing Home Sales | Friday, March 22, 10:00 am, et |
4.94M | Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates. |
RATE HIKE ODDS
The Fed had primed the financial markets at the beginning of the year for at least two additional rate hikes in 2019. The odds fell precipitously following comments by the Fed Chair in January which indicated “the case for raising rates has weakened somewhat.” The minutes from the meeting indicated, “In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.”
“The directors judged that maintaining the current stance of monetary policy was appropriate for the time being in order to assess whether incoming data remained consistent with the outlook for continued solid economic growth, strong labor markets, and inflation remaining near the FOMC’s 2 percent objective.”
The Fed’s schedule the remainder of the year includes meetings April 30/May1, June 18/19, July 30/31, September 17/18, October 29/30, and December 10/11. Right now the odds of another Fed rate hike in 2019 remain below 8%.
Stay alert to data. Strong reports will likely result in rate spikes. Tame readings will pave the way for steady rates at lower levels.
