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Market
Comment
Mortgage bond prices finished the sharply lower which put upward pressure on rates. Rates started the week flat, worsened Tuesday and Wednesday, remained flat Thursday, and worsened again Friday morning. The Middle East conflict factored heavily into the volatility as military strikes resumed. Oil prices rose approximately 5% amid increased inflationary fears and uncertainty.
The data was generally in line with estimates and did not move trading much. ISM Index was 54 as expected. Weekly ADP was 21K vs 30K. Existing home sales were 4.09M vs 4.2M. Weekly jobless claims were 215K vs 218K. Mortgage interest rates finished the week worse by approximately 1/2 of a discount point amid considerable volatility.
LOOKING
AHEAD
|
Economic
Indicator |
Release
Date &
Time |
Consensus
Estimate |
Analysis
|
| Weekly ADP Employment |
Tuesday, July 14,
8:30 am, et
|
20K
|
Important. An indication of employment. Weakness may bring lower rates.
|
| Consumer Price Index |
Tuesday, July 14,
8:30 am, et
|
Down 0.1%,
Core up 0.3%
|
Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates.
|
| Fed Chair Testimony |
Tuesday, July 14,
10:00 am, et
|
None
|
Very important. Fed’s semi-annual report to Congress. Any time the Fed Chair speaks the markets listen.
|
| Producer Price Index |
Wednesday, July 15,
8:30 am, et
|
Up 0.2%,
Core up 0.4%
|
Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates.
|
| Retail Sales |
Thursday, July 16,
8:30 am, et
|
Up 0.3%
|
Important. A measure of consumer demand. Weakness may lead to lower mortgage rates.
|
| Philadelphia Fed Survey |
Thursday, July 16,
10:00 am, et
|
12
|
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
|
| NAHB Housing Index |
Thursday, July 16,
10:00 am, et
|
36
|
Moderately Important. A measure of single-family housing. Weakness may lead to lower mortgage rates.
|
| Housing Starts |
Friday, July 17,
8:30 am, et
|
1.33M
|
Important. A measure of housing sector strength. Weakness may lead to lower rates.
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Fed Testimony
The Fed Chair delivers the Federal Reserve’s semiannual report on monetary policy, familiarly called the Humphrey-Hawkins report, to both the House and Senate Banking Committees in late February/early March and July. The House testimony will start Tuesday this week and will be repeated Wednesday in the Senate. The report is one of the most important speeches given by the Fed Chair and was originally mandated by the Full Employment and Balanced Growth Act. The remarks made to each committee are generally identical in nature and address basic economic principles. The areas addressed tend to be the overall state of the US economy, recent developments, economic fundamentals, foreign developments, economic outlook, ranges for growth, and concluding remarks. Senator Hubert Humphrey and Representative Augustus Hawkins originally sponsored the legislation in 1977.
There is a potential for market volatility anytime Fed Chair Warsh speaks. Exactly what rates will do is unknown, even to Warsh. Therefore, a cautious approach to rate decisions is prudent heading into this event.
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