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Mortgage Market in Review – April 10, 2017

Market Comment Mortgage bond prices finished the week a little higher which helped rates improve. Rates started the week lower. The data mid-week was mixed. The trade deficit was $43.6B versus the expected $44.7B. Factory orders rose 1.8% versus the expected 0.8% increase. ADP payrolls showed the economy added 263K jobs in March, much stronger than the expected gain of 175K. Rates shot higher Wednesday morning as a result. Weekly jobless claims printed at 234K and continuing claims, a summation of all receiving benefits, at 2,028K. Expectations were for claims at 245K and continuing claims at 2,052K. Unemployment was 4.5% and payrolls rose 98K versus the expected 180K increase. Mortgage interest rates finished the week better by approximately 1/4 of discount point despite some volatility. LOOKING AHEAD

Economic Indicator Release Date & Time Consensus Estimate Analysis
3-year Treasury Note Auction Monday, April 10,
1:15 pm, et
None Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
10-year Treasury Note Auction Tuesday, April 11,
1:15 pm, et
None Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
30-year Treasury Bond Auction Wednesday, April 12,
1:15 pm, et
None Important. Bonds will be auctioned. Strong demand may lead to lower mortgage rates.
Weekly Jobless Claims Thursday, April 13,
8:30 am, et
242K Important. An indication of employment. Higher claims may result in lower rates.
Producer Price Index Thursday, April 13
8:30 am, et
Up 0.4%,
Core up 0.3%
Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates.
U of Michigan Consumer Sentiment Thursday, April 13,
10:00 am, et
97 Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Retail Sales Friday, April 14,
8:30 am, et
Up 0.8% Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates.
Consumer Price Index Friday, April 14,
8:30 am, et
Up 0.2%,
Core up 0.1%
Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates.

Producer Price Index The producer price index is a measure of prices at the producer level and is important because it is the first inflation report to be released each month. Investors are typically able to gain an initial indication of inflationary pressures from the release. If producer prices are increasing, there is a tendency for producers to pass the increases on to consumers in the form of higher priced goods. It is important to note that the PPI is only a measure of goods, while the consumer price index is a measure of goods and services. It is possible for the price of goods to remain stable, while the price of services increases. In this scenario PPI would do little to warn of a change in inflationary pressures, while the CPI report would provide an indication of the inflationary effects of the service component.

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.

Market Comment Mortgage bond prices finished the week a little higher which helped rates improve. Rates started the week lower. The data mid-week was mixed. The trade deficit was $43.6B versus the expected $44.7B. Factory orders rose 1.8% versus the expected 0.8% increase. ADP payrolls showed the economy added 263K jobs in March, much stronger than the expected gain of 175K. Rates shot higher Wednesday morning as a result. Weekly jobless claims printed at 234K and continuing claims, a summation of all receiving benefits, at 2,028K. Expectations were for claims at 245K and continuing claims at 2,052K. Unemployment was 4.5% and payrolls rose 98K versus the expected 180K increase. Mortgage interest rates finished the week better by approximately 1/4 of discount point despite some volatility. LOOKING AHEAD

Economic Indicator Release Date & Time Consensus Estimate Analysis
3-year Treasury Note Auction Monday, April 10,
1:15 pm, et
None Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
10-year Treasury Note Auction Tuesday, April 11,
1:15 pm, et
None Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
30-year Treasury Bond Auction Wednesday, April 12,
1:15 pm, et
None Important. Bonds will be auctioned. Strong demand may lead to lower mortgage rates.
Weekly Jobless Claims Thursday, April 13,
8:30 am, et
242K Important. An indication of employment. Higher claims may result in lower rates.
Producer Price Index Thursday, April 13
8:30 am, et
Up 0.4%,
Core up 0.3%
Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates.
U of Michigan Consumer Sentiment Thursday, April 13,
10:00 am, et
97 Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Retail Sales Friday, April 14,
8:30 am, et
Up 0.8% Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates.
Consumer Price Index Friday, April 14,
8:30 am, et
Up 0.2%,
Core up 0.1%
Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates.

Producer Price Index The producer price index is a measure of prices at the producer level and is important because it is the first inflation report to be released each month. Investors are typically able to gain an initial indication of inflationary pressures from the release. If producer prices are increasing, there is a tendency for producers to pass the increases on to consumers in the form of higher priced goods. It is important to note that the PPI is only a measure of goods, while the consumer price index is a measure of goods and services. It is possible for the price of goods to remain stable, while the price of services increases. In this scenario PPI would do little to warn of a change in inflationary pressures, while the CPI report would provide an indication of the inflationary effects of the service component.

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.