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Market
Comment
Mortgage bond prices finished the week near unchanged which held rates steady. Trading remained within a very narrow range amid thin holiday trading conditions. Rates improved slightly to start the week and saw weakness Wednesday and Friday morning. The data showed very little price pressures. September PPI rose 0.3% as expected. The core rose 0.1% vs 0.2%. Retail sales rose 0.2% vs 0.4%. Weekly ADP employment fell 12,500 vs the expected 4,000 decline. The FHFA House Price Index was unchanged vs up 0.2%. Consumer confidence was 88.7 vs 93.4. Durable goods orders rose 0.5% vs 0.3%. Weekly jobless claims were 216K vs 225K. Mortgage interest rates finished the week with no discount point changes.
LOOKING
AHEAD
|
Economic
Indicator |
Release
Date &
Time |
Consensus
Estimate |
Analysis
|
|
ISM Index
|
Monday, Dec. 1,
10:00 am, et
|
48.6
|
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
|
| ADP Employment |
Wednesday, Dec. 3,
8:30 am, et
|
20K
|
Important. An indication of employment. Weakness may bring lower rates.
|
| Weekly Jobless Claims |
Thursday, Dec. 4,
8:30 am, et
|
215K
|
Important. An indication of employment. Higher claims may result in lower rates.
|
| Personal Income and Outlays |
Friday, Dec. 5,
8:30 am, et
|
Up 0.4%,
Up 0.4%
|
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
|
| PCE Core Inflation |
Friday, Dec. 5,
8:30 am, et
|
Up 0.2%
|
Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve.
|
| U of Michigan Consumer Sentiment |
Friday, Dec. 5,
10:00 am, et
|
51
|
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
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Oil
U.S. consumers continue to benefit from relatively tame oil and gas prices. 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 $147 a barrel and gas prices rose accordingly. Only a few years ago we were told that $100 a barrel was the new ‘normal.’
Today U.S. crude futures are priced around $58 per barrel. 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 energy prices, for now, are nowhere in sight.
Today analysts attribute current oil price levels to supply and demand. Global oil supply has increased faster than demand, leading to inventory builds. Global inventories are projected to rise by 800,000 barrels per day in 2025 and 600,000 in 2026. Geopolitical and Policy Uncertainty also factor into prices. The US federal government shutdown and tariff uncertainty have raised economic concerns. New sanctions on Russian oil firms reduced exports, but hints of a Russia-Ukraine peace deal could release stored Russian crude, adding supply.
The U.S. Energy Information Administration’s recent short-term outlook noted “Our forecast assumes lower crude oil prices, the largest component of retail prices, will contribute to lower retail gasoline and diesel prices throughout the forecast period. We expect gasoline prices to fall below $3.00 per gal (gal) on average in 2026, down 10% from 2024, and diesel prices to fall to $3.50/gal in 2026, down 7% from 2024.” The next EIA update is scheduled December 9th.
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