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Market
Comment
Mortgage bond prices finished the week a little higher which put slight downward pressure on rates. Rates worsened Monday and Tuesday, recovered mid-week, and finished relatively flat. The Middle East conflict remained the focus of global markets as negotiations continued. The data was generally solid. Factory orders rose 1.5% vs 0.5%. New home sales were 682K vs 650K. ADP employment was 109K vs 99K. Weekly jobless claims were 200K vs 205K. Productivity rose 0.8% vs 1.4%. Unemployment was 4.3% as expected, Payrolls were 115K vs 62K. Average hourly earnings rose 0.2% vs 0.3%. Mortgage interest rates finished the week better by approximately 1/8 of a discount point.
LOOKING
AHEAD
|
Economic
Indicator |
Release
Date &
Time |
Consensus
Estimate |
Analysis
|
|
Existing Home Sales |
Monday, May 11,
10:00 am, et
|
4.05M
|
Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.
|
| Consumer Price Index |
Tuesday, May 12,
8:30 am, et
|
Up 0.6%,
Core up 0.4%
|
Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates.
|
| Producer Price Index |
Wednesday, May 13,
8:30 am, et
|
Up 0.4%,
Core up 0.2%
|
Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates.
|
| Retail Sales |
Thursday, May 14,
8:30 am, et
|
Up 1.8%
|
Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates.
|
| Weekly Jobless Claims |
Thursday, May 14,
8:30 am, et
|
205K
|
Important. An indication of employment. Higher claims may result in lower rates.
|
| Industrial Production |
Friday, May 15,
9:15 am, et
|
Up 0.2%
|
Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates.
|
| Capacity Utilization |
Friday, May 15,
9:15 am, et
|
75.9%
|
Important. A figure above 85% is viewed as inflationary. Weaker figure may lead to lower rates.
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Retail Sales
Retail sales data is the first indication of weakness or strength in consumer spending released each month. The Bureau of the Census of the US Department of Commerce provides information on how much the consumer spends on the purchase of goods. This data provides the consumption part of the gross domestic product. Retail sales data represents merchandise sold for cash or credit by retailers. Durable goods, such as autos, make up 35% of the figure. The balance consists of non-durables such as gasoline, restaurants, and general merchandise. There are several drawbacks to the report. The data covers purchases of goods only, not services. It is also not adjusted for inflation and is extremely volatile.
Economists are concerned that the current economic uncertainty, higher interest rates, and stagflation fears will curtail consumer spending. The data this week will provide a good picture of how the higher oil and gas prices are impacting consumer purchases. Signs of tame inflation and weak consumer spending could help rates improve. However, signs that inflation remains high and consumer spending remains strong could push rates higher. A cautious approach to float/lock decisions is prudent.
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