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Market
Comment
Mortgage bond prices finished the week a little higher which put some downward pressure on rates. Rates worsened considerably Monday, recovered and more mid-week, and finished relatively flat Friday. The data was tame with very little price pressures. ADP employment was 30.75K vs 25.5K the prior week. New home sales were 580K vs 640K. Durable goods were down 4.5% as expected. GDP rose 2.1% vs up 1.6%. Income was up 0.7% vs up 0.4%. Spending was up 0.7% vs up 0.6%, and Core PCE prices rose 0.3% as expected. Consumer sentiment was 49.5 vs 50. Mortgage interest rates finished the week better by approximately 1/4 of a discount point despite considerable volatility throughout the week.
LOOKING
AHEAD
|
Economic
Indicator |
Release
Date &
Time |
Consensus
Estimate |
Analysis
|
| FHFA House Price Index |
Tuesday, June 30,
10:00 am, et
|
Up 0.2%
|
Moderately Important. A measure of single-family house prices. Weakness may lead to lower rates.
|
| JOLTS Job Openings |
Tuesday, June 30,
10:00 am, et
|
7.28M
|
Important. An indication of employment. A weaker figure may result in lower mortgage rates.
|
| Consumer Confidence |
Tuesday, June 30,
10:00 am, et
|
94.2
|
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
|
| ADP Employment |
Wednesday, July 1,
8:30 am, et
|
118K
|
Important. An indication of employment. Weakness may bring lower rates.
|
| Employment |
Thursday, July 2,
8:30 am, et
|
4.3%,
Payrolls +114K
|
Very important. An increase in unemployment or weakness in payrolls may bring lower rates.
|
| Factory Orders |
Thursday, July 2,
10:00 am, et
|
Up 2.1%
|
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
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Employment Report
The employment report provides an abundance of information for many sectors of the economy and is probably the most important piece of data released each month. Not only does the release give basic employment payroll statistics for the major working sectors, it also provides the average hourly earnings and the average workweek. Economists use this information provided by the Bureau of Labor Statistics (BLS) of the U.S. Department of Labor to estimate many other economic indicators such as industrial production, personal income, housing starts, and GDP monthly revisions. Since there is little data for economists to base their estimates on, the margin of error for the estimates tends to be high. As a result, the employment report can cause substantial market movements. The BLS compiles data from two unrelated surveys that they conduct, the household survey and the establishment survey, in order to complete the report. This explains why there is sometimes a divergence between the unemployment rate and payrolls figure.
Be alert heading into the release. The MBS market will observe the Independence Day holiday Friday and will close early Thursday afternoon. The shortened trading week adds to the potential for volatility associated with the release.
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