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Mortgage Market in Review – December 4, 2018

   

Market Comment

Mortgage bond prices finished the week higher which helped rates improve.  We started on a negative note Monday. Consumer confidence was a solid 135.7.  The economy grew 3.5% in the third quarter as expected.  New home sales printed at 544K versus the anticipated 575K.  A tame inflation reading Thursday morning was credited for most of the improvements.  PCE Inflation rose 0.1% versus the expected 0.2% increase.  Both personal income and outlays rose slightly higher than expected.  Weekly jobless claims printed at 234K and continuing claims, a summation of all receiving benefits, at 1,710K. Expectations were for claims at 218K and continuing claims at 1,668K.  Mortgage interest rates finished the week better by 1/4 of a discount point.


LOOKING AHEAD

Economic
Indicator
Release
Date & Time
Consensus
Estimate

Analysis
ISM Index Monday, Dec. 3,
10:00 am, et
57.9 Important.  A measure of manufacturer sentiment.  Weakness may lead to lower mortgage rates.
ADP Employment Wednesday, Dec. 5,
8:30 am, et
229K Important.  An indication of employment.  Weakness may bring lower rates.
Revised Q3 Productivity Wednesday, Dec. 5,
8:30 am, et
Up 2.2% Important.  A measure of output per hour.  Improvement may lead to lower mortgage rates.
Fed “Beige Book” Wednesday, Dec. 5,
2:00 pm, et
None Important.  This Fed report details current economic conditions across the US.  Signs of weakness may lead to lower rates.
Trade Data Thursday, Dec. 6,
8:30 am, et
$54.5B deficit Important.  Affects the value of the dollar.  A falling deficit may strengthen the dollar and lead to lower rates.
Weekly Jobless Claims Thursday, Dec. 6,
8:30 am, et
235K Important.  An indication of employment.   Higher claims may result in lower rates.
Factory Orders Thursday, Dec. 6,
10:00 am, et
Up 0.8% Important.  A measure of manufacturing sector strength.  Weakness may lead to lower rates.
Employment Friday, Dec. 7,
8:30 am, et
3.7%,
Payrolls +252K
Very important.  An increase in unemployment or weakness in payrolls may bring lower rates.

Fed “Beige Book”

The Fed “Beige Book” is a summary of economic conditions from each of the 12 Federal Reserve regional districts.  The release takes place eight times a year approximately two weeks ahead of each of the Federal Open Market Committee meetings.  The report is used at the FOMC meetings, which tends to be one of the most influential events in the market.

 

Market participants are continually attempting to determine what FOMC interest rate policy will be ahead of the next meeting.  Any deviation from expectations usually results in extreme short- term market volatility.  The timing of the “Beige Book” provides analysts a valuable look at one of the many factors the FOMC considers in setting interest rate policy.

 

 

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