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Mortgage Market in Review – August 29, 2016

   

Market Comment

Mortgage bond prices finished the week near unchanged holding rates steady.  New home sales printed at 654K versus the expected 580K.  Existing home sales printed at 5.39M versus the expected 5.54M units.  According to the FHFA Housing Price Index, housing prices rose at a 5.6% annual rate in the previous 12 months. The monthly gain was 0.2% which was near expectations.  Federal Reserve Chair Yellen spoke at the Jackson Hole Symposium. The gathering is sponsored by the Federal Reserve Bank of Kansas City and focuses on important economic issues that face the U.S. and world economies. She provided no clear indication of when the next rate hike may occur. Mortgage interest rates finished the week unchanged.


LOOKING AHEAD

Economic
Indicator
Release
Date & Time
Consensus
Estimate

Analysis
Personal Income and Outlays Monday, Aug. 29,
8:30 am, et
Up 0.2%,
Up 0.3%
Important.  A measure of consumers’ ability to spend.  Weakness may lead to lower mortgage rates.
PCE Core Inflation Monday, Aug. 29,
8:30 am, et
Up 0.1% Important.  A measure of price increases for all domestic personal consumption.  Weaker figure may help rates improve.
Consumer Confidence Tuesday, Aug. 30,
10:00 am, et
97.2 Important.  An indication of consumers’ willingness to spend.  Weakness may lead to lower mortgage rates.
ADP Employment Wednesday, Aug. 31,
8:30 am, et
178K Important.  An indication of employment.  Weakness may bring lower rates.
Weekly Jobless Claims Thursday, Sept. 1,
8:30 am, et
262K Important.  An indication of employment.   Higher claims may result in lower rates.
Revised Q2 Productivity Thursday, Sept. 1,
8:30 am, et
Up 0.1% Important.  A measure of output per hour.  Improvement may lead to lower mortgage rates.
ISM Index Thursday, Sept. 1,
10:00 am, et
52.5 Important.  A measure of manufacturer sentiment.  Weakness may lead to lower mortgage rates.
Employment Friday, Sept. 2,
8:30 am, et
4.9%,
Payrolls +266K
Very important.  An increase in unemployment or weakness in payrolls may bring lower rates.
Factory Orders Friday, Sept. 2,
10:00 am, et
Down 0.8% Important.  A measure of manufacturing sector strength.  Weakness may lead to lower rates.

Rate Hike Back in Focus

Market sentiment regarding a future Fed rate hike has not changed much from the recent approximate 20% chance at the September meeting which takes place on the 16th and 17th.  What has changed is the language coming from some Fed officials.
San Francisco Fed President Williams, New York Presidents Dudley, and Atlanta President Lockhart have all noted a possible rate increase in the short term.  The most recent minutes from the last Fed meeting stated, “Several (members) expressed concern that an extended period of low interest rates risked intensifying incentives for investors to reach for yield and could lead to the misallocation of capital and mispricing of risk, with possible adverse consequences for financial stability.”  Now is a great time to take advantage of historically low mortgage interest rates to avoid future market volatility.

Copyright 2016. 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.