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Market
Comment
Mortgage bond prices finished the week lower, which put significant upward pressure on rates. Rates were flat to slightly better on Monday and Tuesday but worsened considerably the remainder of the week. The U.S. debt market saw yields rise to levels not seen since the early 2000s. Philadelphia Federal Reserve President Anna Paulson said, "Looking ahead, if conditions evolve as I expect, some modest further tightening may be warranted." Earlier in the week Fed Governor Barr indicated additional rate hikes are needed. The data was heavily overshadowed by escalating oil prices and continued Middle East fear and uncertainty. Weekly ADP employment was 20K vs 16.25K the prior week. New home sales were 684K vs 620K. Weekly jobless claims were 197K vs 201K. Durable goods were unchanged vs down 0.4%. Consumer sentiment was 48.1 vs 47.6. Mortgage interest rates finished the week worse by over a full discount point.
LOOKING
AHEAD
|
Economic
Indicator |
Release
Date &
Time |
Consensus
Estimate |
Analysis
|
| FHFA House Price Index |
Tuesday, Sept. 29,
10:00 am, et
|
Up 0.1%
|
Moderately Important. A measure of single-family house prices. Weakness may lead to lower rates.
|
| Consumer Confidence |
Tuesday, Sept. 29,
10:00 am, et
|
90
|
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
|
| ADP Employment |
Wednesday, Sept. 30,
8:30 am, et
|
70K
|
Important. An indication of employment. Weakness may bring lower rates.
|
| Personal Income and Outlays |
Wednesday, Sept. 30,
8:30 am, et
|
Up 0.4%,
Up 0.7%
|
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
|
| PCE Core Inflation |
Wednesday, Sept. 30,
8:30 am, et
|
Up 0.3%
|
Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve.
|
| Q2 GDP |
Wednesday, Sept. 30,
8:30 am, et
|
Up 1.6%
|
Very important. The aggregate measure of US economic production. Weakness may lead to lower rates.
|
| ISM Index |
Thursday, Oct. 1,
10:00 am, et
|
54.8
|
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
|
| Employment |
Friday, Oct. 2,
8:30 am, et/span>
|
4.2%,
Payrolls +100K
|
Very important. An increase in unemployment or weakness in payrolls may bring lower rates.
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PCE
The US Department of Commerce’s Bureau of Economic Analysis releases the core PCE price index. The report provides the average increase in costs for personal consumption expenditures. PCE is significant in that the Fed uses it in determining inflation as opposed to the prior use of the consumer price index. The PCE includes the price of spending for and on behalf of households. This includes health care spending paid for a household by a business. The CPI only reflects out of pocket expenses paid directly by consumers. The Fed continues to state that inflation is a significant concern.
Be cautious heading into the release. Data can surprise the financial markets from time to time.
Mortgage interest rates will likely spike higher in the short term if the PCE core reading is higher than expected. A reading in line with expectations will likely help rates stay in check.
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