Mortgage Market in Review – December 4, 2017

December 4, 2017
Market Comment

Mortgage bond prices finished the week lower which put upward pressure on rates.  Trading was quiet the first portion of the week.  Stocks surged higher the latter portion of the week as the DOW hit record levels.  Housing prices continued to rise according to both the Federal Housing Finance Agency (FHFA) and the Case Shiller releases.  Low inventories coupled with low interest rates are two reasons cited for the year over year rise in prices.  Consumer confidence was stronger than expected.  Revised GDP rose 3.3% versus the expected 3% reading.  This figure moved in the right direction but many analysts still want to see higher GDP figures with so much support from the Federal Reserve.  Core PCE inflation rose 0.2% as expected.  ISM index was 58.2 as expected.  We ended the week worse by 1/4 of a discount point.


LOOKING AHEAD

Economic
Indicator		 Release
Date & Time		 Consensus
Estimate
Analysis
Factory Orders Monday, Dec. 4,
10:00 am, et		 Up 1.1% Important.  A measure of manufacturing sector strength.  Weakness may lead to lower rates.
Trade Data Tuesday, Dec. 5,
8:30 am, et		 $43.5B deficit Important.  Affects the value of the dollar.  A falling deficit may strengthen the dollar and lead to lower rates.
ADP Employment Wednesday, Dec. 6,
8:30 am, et		 235K Important.  An indication of employment.  Weakness may bring lower rates.
Revised Q3 Productivity Wednesday, Dec. 6,
8:30 am, et		 Up 3.1% Important.  A measure of output per hour.  Improvement may lead to lower mortgage rates.
Weekly Jobless Claims Thursday, Dec. 7,
8:30 am, et		 238K Important.  An indication of employment.   Higher claims may result in lower rates.
Consumer Credit Thursday, Dec. 7,
3:00 pm, et		 $21B Low importance.  A significantly large increase may lead to lower mortgage interest rates.
Employment Friday, Dec. 8,
8:30 am, et		 4.1%,
Payrolls +262K		 Very important.  An increase in unemployment or weakness in payrolls may bring lower rates.
U of Michigan Consumer Sentiment Friday, Dec. 8,
10:00 am, et		 99 Important.  An indication of consumers’ willingness to spend.  Weakness may lead to lower mortgage rates.

Jobs and the Economy

Our economy in the US is driven by consumer spending, which accounts for almost 70% of Gross Domestic Product (GDP).  Three driving forces, low unemployment, low commodity costs, and a solid housing market currently help consumer spending and keep the economic recovery moving in the right direction.

It is simple; when a person has a job they can spend money.  Low food and energy costs, items that must be purchased to keep a household running, increases money that could be used for other “luxury” items like TV’s and cars.  Lastly, many households relied on home equity to enhance lifestyles, pay for college, or make major improvements to the house.  Rising home prices make that a possibility again.

The abundance of data this week will provide insight into the current state of the economy and most releases have the potential to result in mortgage interest rate changes.

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.