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Market
Comment
Mortgage bond prices finished the week higher which put downward pressure on rates. Rates traded back and forth mid-week and finished with solid improvements Friday morning. The Middle East ceasefire continued and reports of oil shipping lanes reopening buoyed US stocks and bonds. The data was mixed. Existing home sales were 3.98M vs 4.06M. Weekly ADP was 39K vs 25K. Producer prices rose 0.5% vs 1.1%. The Core was up 0.1% vs 0.5%. NAHB housing was 34 vs 37. Weekly jobless claims were 207K vs 215K. The Philadelphia Fed business conditions index was 40.8 vs 40. Industrial production fell 0.5% vs up 0.1%. Capacity use was 75.7% vs 76.3%. Mortgage interest rates finished the week better by approximately 3/8 of a discount point.
LOOKING
AHEAD
|
Economic
Indicator |
Release
Date &
Time |
Consensus
Estimate |
Analysis
|
| Weekly ADP Employment |
Tuesday, April 21,
8:30 am, et
|
40K
|
Important. An indication of employment. Weakness may bring lower rates.
|
| Retail Sales |
Tuesday, April 21,
8:30 am, et
|
Up 1.3%
|
Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates.
|
| Business Inventories |
Tuesday, April 21,
10:00 am, et
|
Up 0.1%
|
Low importance. An indication of stored-up capacity. A significantly larger increase may lead to lower rates.
|
| 20-year Treasury Bond Auction |
Wednesday, April 22,
1:15 pm, et
|
None
|
Important. Bonds will be auctioned. Strong demand may lead to lower mortgage rates.
|
| Weekly Jobless Claims |
Thursday, April 23,
8:30 am, et
|
212K
|
Important. An indication of employment. Higher claims may result in lower rates.
|
| U of Michigan Consumer Sentiment |
Friday, April 24,
10:00 am, et
|
47.6
|
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
|
Consumer Sentiment
In the US the consumer is often seen as the driving force of the economy. A large percentage of the total economic output is for personal use. Analysts attempt to predict the future spending patterns of consumers to gauge economic activity.
The Michigan consumer sentiment index is one piece of data used to measure consumer attitudes. The index is derived from a telephone survey, which gathers information on consumer expectations of the overall economy. The preliminary report is released around the 10th of each month and then is revised throughout the remainder of the month. It is significant in that it provides a precursor into consumers’ willingness to spend in the months ahead. However, many analysts point out that willingness to spend does not always convert to actual expenditures. American consumers continue to spend despite high interest rates, dampening housing, and economic uncertainty. Jolts amid the tariff turmoil could cause concern.
Look for any variation from estimates in the consumer data this week to cause mortgage interest rate volatility. Signs of eroding consumer confidence could lead to improvements in mortgage interest rates. However, stronger than expected figures could spike rates higher.
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