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Mortgage Market in Review – August 14, 2017

 

Market Comment

Mortgage bond prices finished the week higher which helped rates fall.  Most of the improvements came Wednesday morning.  North Korea threatened to attack Guam and the US Administration warned of “fire and fury” if North Korea continued down that path.  This caused some uneasiness in the global financial markets and MBS prices pushed higher as a result.  Q2 Productivity rose 0.9% versus the expected 0.6% increase.  Producer prices fell 0.1% and the core value, which excludes the volatile food and energy components, also fell 0.1%. Economists expected both components of PPI to rise 0.2%.  Tame inflation readings help rates stay lower in the short term.  Weekly jobless claims were near expectations.  We ended the week with discount points better by 1/8 to 1/4 of a discount point despite some choppy trading Wednesday afternoon.


LOOKING AHEAD

Economic
Indicator
Release
Date & Time
Consensus
Estimate

Analysis
Retail Sales Tuesday, Aug. 15,
8:30 am, et
Down 0.2% Important.  A measure of consumer demand.  Weakness may lead to lower mortgage rates.
Housing Starts Wednesday, Aug. 16,
8:30 am, et
1220K Important.  A measure of housing sector strength.  Weakness may lead to lower rates.
Fed Minutes Wednesday, Aug. 16,
2:00 pm, et
None Important.  Details of the last Fed meeting will be thoroughly analyzed.
Weekly Jobless Claims Thursday, Aug. 17,
8:30 am, et
242K Important.  An indication of employment.   Higher claims may result in lower rates.
Philadelphia Fed Survey Thursday, Aug. 17,
10:00 am, et
19 Moderately important.  A survey of business conditions in the Northeast.  Weakness may lead to lower rates.
Industrial Production Thursday, Aug. 17,
9:15 am, et
Up 0.3% Important.  A measure of manufacturing sector strength.  Weakness may lead to lower rates.
Capacity Utilization Thursday, Aug. 17,
9:15 am, et
77.2% Important.  A figure above 85% is viewed as inflationary.  Weakness may lead to lower rates.
Leading Economic Indicators Thursday, Aug. 17,
10:00 am, et
Up 0.2% Important.  An indication of future economic activity.  A smaller increase may lead to lower rates.
U of Michigan Consumer Sentiment Friday, Aug. 18,
10:00 am, et
94 Important.  An indication of consumers’ willingness to spend.  Weakness may lead to lower mortgage rates.

Hurricane Season

The Federal Reserve is clear that weather plays a significant part in the overall economy.  The U.S. enters the heart of hurricane season and the weather is almost certain to make headlines in the months ahead.  The U.S. Energy Information Administration indicates that “during major disruptions such as hurricanes or power outages, the Department issues situation reports to provide information about a disruption’s effect on gasoline supply and other energy infrastructure and supply issues.”  The National Oceanic and Atmospheric Administration recently increased their projections for tropical storms this year.  While a specific area may have no threat of a hurricane or severe weather a single storm can cause financial losses that ripple through the entire economy.


Copyright 2017. 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.