|
Market
Comment
Mortgage bond prices finished the week sharply lower, which put significant upward pressure on rates. Rates worsened Monday in continuation of selling pressure that followed Fed Chair Warsh’s remarks the prior Friday. Selling continued throughout the week with only a slight reprieve Thursday. Inflation fears tied to the conflict in the Middle East continued to factor into trading. The Fed “Beige Book” showed an overall positive outlook with concerns about elevated energy prices. The data was mixed. ISM Index was 54.6 vs 55.2. Factory orders rose 0.9% vs 0.6%. ADP employment was 38K vs 47K. Weekly jobless claims were 206K vs 205K. The Trade Deficit was $88.6B vs $90B. Productivity rose 1.4% as expected. Unemployment was 4.1% as expected. Non-farm Payrolls rose 162K vs 56K. Mortgage interest rates finished the week worse by approximately 1/2 of a discount point.
LOOKING
AHEAD
|
Economic
Indicator |
Release
Date &
Time |
Consensus
Estimate |
Analysis
|
| Weekly ADP Employment |
Tuesday, Sept. 8,
8:30 am, et
|
12K
|
Important. An indication of employment. Weakness may bring lower rates.
|
| Consumer Credit |
Tuesday, Sept. 8,
3:00 pm, et
|
$11.3B
|
Low importance. A significant increase may lead to lower mortgage interest rates.
|
| Producer Price Index |
Thursday, Sept. 10,
8:30 am, et
|
Up 0.3%,
Core up 0.3%
|
Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates.
|
| Weekly Jobless Claims |
Thursday, Sept. 10,
8:30 am, et
|
205K
|
Important. An indication of employment. Higher claims may result in lower rates.
|
| Existing Home Sales |
Thursday, Sept. 10,
10:00 am, et
|
|
Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.
|
| Consumer Price Index |
Friday, Sept. 11,
8:30 am, et
|
Up 0.4%,
Core up 0.2%
|
Important. A measure of inflation at the consumer level. Lower than expected increases may lead to lower rates.
|
| U of Michigan Consumer Sentiment |
Friday, Sept. 11,
10:00 am, et
|
51.5
|
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
|
Payrolls Increase
The August employment report showed a much stronger rebound in hiring than markets had prepared for. Nonfarm payrolls rose by 162K, roughly three times the consensus forecast that had clustered in the mid-50K range. July’s originally reported decline was also revised into a modest gain, so the two-month picture of the labor market looks healthier than it did heading into the release. The unemployment rate stayed at 4.1 percent, matching expectations, which left the headline surprise concentrated on the payrolls number itself.
That surprise immediately pushed short-term interest-rate expectations higher. Traders lifted the odds of a September Fed hike from about even money to around 60 percent, and Treasury yields followed. The two-year note, the maturity most sensitive to near-term policy, jumped several basis points, while the 10-year yield and mortgage interest rates also moved up, though by smaller amounts.
This week’s inflation data will still matter more for the final decision, but Friday’s payrolls print removed some of the recent dovish cushion from the front end of the curve. A cautious approach to float/lock decisions is prudent amid continued inflation concerns.
To
unsubscribe, please hit "reply" and include unsubscribe in
the subject line.
Copyright
2018. All Rights Reserved. Mortgage Market
Information Services, Inc. www.ratelink.com
The information contained herein is
believed to be accurate, however no representation or warranties are
written or implied.
|
