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Market
Comment
Mortgage bond prices finished the week sharply higher which put much-need downward pressure on rates. Rates improved significantly Monday morning as sentiment shifted. We held those improvements throughout most of the week except for Friday morning. The heavyweight employment report was stronger than expected and some selling pressure emerged. Unemployment was 4.3% vs 4.4%. Payrolls rose 178K vs 60K. ISM Index was 52.7 vs 52.5. ADP employment was 62K vs 40K. Retail sales rose 0.6% vs 0.5%. The FHFA house price index rose 0.1% as expected. JOLTS jobs were 6.882M vs 6.92M. Consumer confidence was 91.8 vs 88. Mortgage interest rates finished the week better by almost a full discount point.
LOOKING
AHEAD
|
Economic
Indicator |
Release
Date &
Time |
Consensus
Estimate |
Analysis
|
| Durable Goods Orders |
Tuesday, April 7,
8:30 am, et
|
Up 0.4%
|
Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates.
|
| Consumer Credit |
Tuesday, April 7,
3:00 pm, et
|
$9.575B
|
Low importance. A significantly large increase may lead to lower mortgage interest rates.
|
| Fed Minutes |
Wednesday, April 8,
2:00 pm, et
|
None
|
Important. Details of the last Fed meeting will be thoroughly analyzed.
|
| Personal Income and Outlays |
Thursday, April 9,
8:30 am, et
|
Up 0.3%,
Up 0.5%
|
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
|
| PCE Core Inflation |
Thursday, April 9,
8:30 am, et
|
Up 0.4%
|
Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve.
|
| Q4 GDP |
Thursday, April 9,
8:30 am, et
|
Up 0.7%
|
Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.
|
| Consumer Price Index |
Friday, April 10,
8:30 am, et
|
Up 0.9%,
Core up 0.3%
|
Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates.
|
| Factory Orders |
Friday, April 10,
10:00 am, et
|
Up 0.1%
|
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
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Durable Goods Orders
Durable goods orders are generally believed to be a precursor of activity in the manufacturing sector because manufacturing must have an order before considering an increase in production. Conversely, a decrease in orders eventually causes production to be scaled back; otherwise the manufacturer accumulates inventories, which must be financed.
Unfortunately, durable goods orders data has many drawbacks. The first problem with the orders data is that they are extremely volatile. The volatility of the data usually is attributed to the civilian aircraft and defense components of the figure. For example, if Boeing has a big order for one of its jumbo jets, the civilian aircraft category can change by $3-4 billion. The same scenario is evident when an aircraft carrier is ordered, surges in the defense category result. The second problem with the data is that orders are continuously being revised.
Be cautious heading into the data. Market conditions remain volatile and economic surprises can trigger rate changes.
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