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Market
Comment
Mortgage bond prices finished the week slightly lower which put a little upward pressure on rates. Rates pushed higher Monday morning, were neutral mid-week, and finished with a slight negative bias. Stocks were considerably more volatile with huge swings higher Monday and into Tuesday morning followed by sharp selling pressure most of the remainder of the week. The financial markets were unsettled by Fed uncertainty. The odds of a rate cut at the December 10th meeting fell to lower than 50%. Analysts are concerned the disruption in U.S. Government data over the past 43 days will take some time to factor into trading. Mortgage interest rates finished the week worse by approximately 1/8 of a discount point.
LOOKING
AHEAD
|
Economic
Indicator |
Release
Date &
Time |
Consensus
Estimate |
Analysis
|
|
ADP Employment
|
Tuesday, Nov. 18,
8:30 am, et
|
20K
|
Important. An indication of employment. Weakness may bring lower rates.
|
| NAHB Housing Index |
Tuesday, Nov. 18,
10:00 am, et
|
38
|
Moderately Important. A measure of single-family housing. Weakness may lead to lower mortgage rates.
|
| Fed Minutes |
Wednesday, Nov. 19,
2:00 pm, et
|
None
|
Important. Details of the last Fed meeting will be thoroughly analyzed.
|
| Philadelphia Fed Survey |
Thursday, Nov. 20,
8:30 am, et
|
36
|
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
|
| Existing Home Sales |
Thursday, Nov. 20,
10:00 am, et
|
4.06M
|
Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.
|
| U of Michigan Consumer Sentiment |
Friday, Nov. 21,
10:00 am, et
|
50.3
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Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
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Data Still Delayed
The U.S. Government went back to work in full force last week which is good news as far as the financial markets are concerned. Fed Chair Jerome Powell noted the use of state-level unemployment claims reports and the ADP National Employment Report as alternative data sources during the government shutdown. Regional bank surveys and anecdotal reports from business contacts were also referenced as supplementary inputs in the absence of official BLS data. The Fed is clear any future actions will depend upon the data and market participants desperately want to get a better picture of the state of the economy.
Fear and uncertainty increased despite the resolution to the shutdown as data continues to be delayed and will be for some time. The U.S. Bureau of Labor Statistics noted on their website, “BLS will announce revised news release dates on this page as they become available. We appreciate your patience while we work to get this information out as soon as possible, as it may take time to fully assess the situation and finalize revised release dates.”
Key economic indicators analysts are eagerly awaiting include September and October jobs reports, CPI, PPI, GDP, retail sales, and productivity data. These datasets are now resuming on a staggered schedule, with initial releases such as September jobs and PPI data possibly arriving this week. Others are potentially delayed by 1-2 weeks due to understaffing and data quality issues.
A cautious approach to float/lock decisions is prudent in this trading environment. While the long-term trend shows downward pressure on rates, the short-term is less certain as we saw the past few weeks with some minor rate increases.
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