MIG Market Watch, May 21st, 2018
Posted by : Admin
MARKET COMMENT
Mortgage bond prices finished the week sharply lower which put upward pressure on rates. We started the week on a negative note and the selling pressure continued. Retail sales rose 0.3% as expected. Housing starts were weaker than expected. The Philadelphia Fed survey, an indication of manufacturing activity in the all-important Mid-Atlantic region, printed at 34.4. That data was much better than expectations for a read of 20. A reading above zero indicates economic expansion and the index printed above that level for 2+ years. Leading economic indicators rose 0.4% as expected. Overall the data showed solid economic conditions. We ended the week worse by 1/2 to 5/8 of a discount point.
LOOKING AHEAD
Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
New Home Sales | Wednesday, May 23, 10:00 am, et |
699K | Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
Fed Minutes | Wednesday, May 23, 2:00 pm, et |
None | Important. Details of the last Fed meeting will be thoroughly analyzed. |
Weekly Jobless Claims | Thursday, May 24, 8:30 am, et |
225K | Important. An indication of employment. Higher claims may result in lower rates. |
FHFA House Price Index | Thursday, May 24, 10:00 am, et |
Up 1.4% | Moderately Important. A measure of single family house prices. Weakness may lead to lower rates. |
Existing Home Sales | Thursday, May 24, 10:00 am, et |
5.65M | Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates. |
Durable Goods Orders | Friday, May 25, 8:30 am, et |
Up 2.8% | Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates. |
U of Michigan Consumer Sentiment | Friday, May 25, 10:00 am, et |
99 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
OIL & GAS PRICES
U.S. consumers benefited from relatively tame oil and gas prices for some time. In the early 2000s consumers enjoyed low gas prices with a barrel of oil around $20. By the summer of 2008 oil prices hit all-time highs with prices over $140 a barrel and gas prices rose accordingly. Only a few years ago we were told that $100 a barrel was the new ‘normal.’ That all reversed and consumers once again benefited from low prices. Some attributed the past highs to “peak oil” levels while others argued they were due to supply and demand. Others called it a “bubble” led by speculation and momentum trading. Whatever the cause, inflation fears tied to rising energy prices reignited recently as we saw oil prices hit $80 a barrel. This was the highest level since 2014.