| Market Comment
Mortgage bond prices finished the week higher which put downward pressure on rates. Stocks were very volatile as trade war fears subsided and renegotiated trade deals emerged. The economic data was mixed which pushes additional Fed rate hikes out in time. Consumer confidence was 127.7 versus the expected 130 reading. Q4 GDP was revised to 2.9% versus 2.6%. Weekly jobless claims were 215K. Analysts expected a reading of 233K. Inflation remained in check which was good for fixed income securities such as mortgage-backed securities. Core PCE inflation rose 0.2% as expected. Personal income rose 0.4% versus the expected 0.5% increase. Spending rose 0.2% versus the expected 0.3% increase. We ended the week better by approximately 1/8 to 1/4 of a discount point.
LOOKING AHEAD
Economic
Indicator |
Release
Date & Time |
Consensus
Estimate |
Analysis |
| ISM Index |
Monday, April 2,
10:00 am, et |
61 |
Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates. |
| Construction Spending |
Monday, April 2,
10:00 am, et |
Up 0.3% |
Low importance. An indication of economic strength. Significant weakness may lead to lower rates. |
| ADP Employment |
Wednesday, April 4,
8:30 am, et |
225K |
Important. An indication of employment. Weakness may bring lower rates. |
| Factory Orders |
Wednesday, April 4,
10:00 am, et |
Up 0.3% |
Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
| Weekly Jobless Claims |
Thursday, April 5,
8:30 am, et |
225K |
Important. An indication of employment. Higher claims may result in lower rates. |
| Trade Data |
Thursday, April 5,
8:30 am, et |
$57B deficit |
Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates. |
| Employment |
Friday, April 6,
8:30 am, et |
4.1%,
Payrolls +265K |
Very important. An increase in unemployment or weakness in payrolls may bring lower rates. |
| Consumer Credit |
Friday, April 6,
3:00 pm, et |
$14B |
Low importance. A significantly large increase may lead to lower mortgage interest rates. |
ISM
The Institute for Supply Management (ISM), formerly the National Association of Purchasing Management (NAPM), releases the “Report on Business” on the first working day of each month. Part of this report is the “diffusion index,” which tracks the economy’s ups and downs fairly well.
In conducting this survey, the ISM questions purchasing executives from over 250 industrial companies compiling data on production, orders, commodity prices, inventories, vendor performance, and employment. Each of the respondents is asked to rank the categories as “up” or “down.” Various weights are applied to the individual components to form the composite index. A composite index reading of 50 can be thought of as a “swing point.” A reading above 50 implies an increase in economic activity, while a reading below 50 indicates a decline. The ISM report is difficult for economists to forecast because there is little data upon which to base an educated guess. The report has a large “surprise factor” and can cause market swings. Be cautious heading into the release.
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