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Mortgage Market in Review – April 24, 2017

   

Market Comment

Mortgage bond prices finished the week near unchanged which kept rates steady.  Rates started the week lower Monday morning but the improvements were erased by Thursday.  The NAHB Housing Market Index printed at 68 versus the expected 70. The index is based on a monthly survey of members belonging to the National Association of Homebuilders (NAHB) is designed to measure sentiment for the U.S. single-family housing market.  Weekly jobless claims were near expectations.  Leading economic indicators rose 0.4% versus the expected 0.3% increase.  The Philadelphia Fed survey showed strong economic activity in the Mid-Atlantic region.  Mortgage interest rates finished the week unchanged to better by approximately 1/8 of discount point despite some volatility.


LOOKING AHEAD

Economic
Indicator
Release
Date & Time
Consensus
Estimate

Analysis
FHFA House Price Index Tuesday, April 25,
10:00 am, et
Up 0.4% Moderately Important.  A measure of single family house prices.  Weakness may lead to lower rates.
New Home Sales Tuesday, April 25,
10:00 am, et
600K Important.  An indication of economic strength and credit demand.  Weakness may lead to lower rates.
Consumer Confidence Tuesday, April 25,
10:00 am, et
126 Important.  An indication of consumers’ willingness to spend.  Weakness may lead to lower mortgage rates.
Treasury Auctions Begin Tuesday, April 25,
10:00 am, et
None Important.  2Y Notes on Tuesday, 5Y Notes on Wednesday, and 7Y Notes on Thursday.
Durable Goods Orders Thursday, April 27,
8:30 am, et
Up 1.8% Important.  An indication of the demand for “big ticket” items.  Weakness may lead to lower rates.
Weekly Jobless Claims Thursday, April 27,
8:30 am, et
240K Important.  An indication of employment.   Higher claims may result in lower rates.
Q1 Advance GDP Friday, April 28,
8:30 am, et
Up 2.1% Very important.  The aggregate measure of US economic production.  Weakness may lead to lower rates.
Q1 Employment Cost Index Friday, April 28,
8:30 am, et
Up 0.5% Very important. A measure of wage inflation.  Weakness may lead to lower rates.
U of Michigan Consumer Sentiment Friday, April 28,
10:00 am, et
98.2 Important.  An indication of consumers’ willingness to spend.  Weakness may lead to lower mortgage rates.

Employment Cost Index

The employment cost index is a quarterly report issued by the Department of Labor.  The report measures the growth of wages, salaries, and benefits costs over a certain period of time.  Though ECI figures are usually weeks old, the data remains the best indicator of employment price pressures considering it factors employees’ total compensation.

 

If wage pressures become evident, higher expectations of inflation also tend to arise.  However, increasing compensation does not necessarily lead to increased inflationary pressures.  Oftentimes, increased productivity enables employers to increase compensation without increasing the costs of their goods or services.  Be cautious heading into this release.

 


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