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Market
Comment
Mortgage bond prices finished the week near unchanged which held rates steady. Trading was flat to start the week, negative mid-week, and positive to end. Stocks were negative for the week with the DOW down over 500 points and other indices also negative. The heavyweight employment report was mixed. Unemployment came in at 4.3% vs 4.4%. Payrolls rose 130K vs 70K. Average Hourly Earnings rose 0.4% vs 0.3%. ADP weekly employment rose 6.5K vs 5K. Retail Sales were unchanged vs up 0.4%. ECI rose 0.7% vs 0.8%. Weekly jobless claims were 227K vs 222K. Mortgage interest rates finished the week unchanged to better by approximately 1/8 of a discount point.
LOOKING
AHEAD
|
Economic
Indicator |
Release
Date &
Time |
Consensus
Estimate |
Analysis
|
| NAHB Housing Index |
Tuesday, Feb. 17,
10:00 am, et
|
38
|
Moderately Important. A measure of single-family housing. Weakness may lead to lower mortgage rates.
|
| Durable Goods Orders |
Wednesday, Feb. 18,
8:30 am, et
|
Up 4.2%
|
Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates.
|
| Housing Starts |
Wednesday, Feb. 18,
8:30 am, et
|
1.2M
|
Important. A measure of housing sector strength. Weakness may lead to lower rates.
|
| Fed Minutes |
Wednesday, Feb. 18,
2:00 pm, et
|
None
|
Important. Details of the last Fed meeting will be thoroughly analyzed.
|
| Trade Data |
Thursday, Feb. 19,
8:30 am, et
|
$55.5B deficit
|
Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
|
| Q4 GDP |
Friday, Feb. 20,
8:30 am, et
|
Up 3%
|
Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.
|
| Personal Income and Outlays |
Friday, Feb. 20,
8:30 am, et
|
Up 0.3%,
Up 0.3%
|
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
|
| PCE Core Inflation |
Friday, Feb. 20,
8:30 am, et
|
Up 0.4%
|
Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve.
|
Tame Inflation
Tame inflation data last week helped rates remain steady in the short term. Consumer prices rose 0.2% vs 0.3%. The core rose 0.3% as expected. Year over year inflation rose 2.4% vs 2.5%. This was much needed with current 30Y fixed rate mortgages hovering in the 6% to 6.5% range. Yearly inflation still remains above the Fed’s preferred 2% goal.
If future readings show inflation near 2% that could pave the way for Fed rate cuts which will push all rates lower over time. As of late, the Fed remains split on their dual mandate of maximum employment and stable prices. Some Fed members have clearly stated they are not convinced the inflation fight is finished. Others argue additional cuts are necessary to spur economic growth. Analysts currently expect two Fed rate cuts this year with the first sometime in early summer if not sooner.
Data will continue to be the key. The housing market and consumers will benefit if inflation continues to fall and mortgage interest rates follow suit. The current trend is positive but a cautious approach to float/lock decisions is wise as short-term volatility is unpredictable.
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