Market Comment
Mortgage bond prices finished the week lower which put upward pressure on rates. Rates were positive the first portion of the week tied to Greek debt concerns. Investors feared uncertainty in the eurozone which resulted in flight to quality buying of MBSs. The Greek Finance Minister resigned after Greek voters rejected a proposal that required more austerity measures. Trading was volatile the rest of the week amid little data and various news reports about progress toward a Greek debt restructuring agreement. Weekly jobless claims were 297K versus the expected 275K. This was rate friendly but did little to counter the eurozone developments. Stocks also experienced volatility with 100 point swings from day to day. Mortgage interest rates finished the week worse by about 1/8 to 1/4 of a discount point.
Retail Sales Retail sales data is the first indication of weakness or strength in consumer spending released each month. The Bureau of the Census of the US Department of Commerce provides information on how much the consumer spends on the purchase of goods. This data provides the consumption part of the gross domestic product. Retail sales data represents merchandise sold for cash or credit by retailers. Durable goods, such as autos, make up 35% of the figure. The balance consists of non-durables such as gasoline, restaurants, and general merchandise. There are several drawbacks to the report. The data covers purchases of goods only, not services. It is also not adjusted for inflation and is extremely volatile. Economists are concerned that the current economic uncertainty will curtail consumer spending.
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