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Mortgage Market in Review – July 9, 2018


Market Comment

Mortgage bond prices finished the week near unchanged which kept rates steady. Trade was quiet amid thin trading conditions surrounding the holiday. ISM index was 60.2 vs the expected 59. Factory orders rose 0.4% versus the expected 0.1% increase. ADP employment was 177 vs the expected 180K. Weekly jobless claims were 231k, expected 223K. Continuing claims were 1739K vs the 1720K average. Unemployment was 4%, expected 3.8%. Payrolls rose 214K. Analysts called for a 195K increase. Average hourly earnings rose 0.2%, expected up 0.3%. The disparity in the headline figure and the payrolls data wasn’t uncommon as each is derived from different data sets. We ended the week with discount points near unchanged.


Date & Time

Consumer Credit Monday, July 9,
3:00 pm, et
$9.56B Low importance. A significantly large increase may lead to lower mortgage interest rates.
3-year Treasury Note Auction Tuesday, July 10,
1:15 pm, et
None Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
Producer Price Index Wednesday, July 11,
8:30 am, et
Up 0.4%,
Core up 0.2%
Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates.
10-year Treasury Note Auction Wednesday, July 11,
1:15 pm, et
None Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
Weekly Jobless Claims Thursday, July 12,
8:30 am, et
228K Important. An indication of employment. Higher claims may result in lower rates.
Consumer Price Index Thursday, July 12,
8:30 am, et
Up 0.2%,
Core up 0.1%
Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates.
30-year Treasury Bond Auction Thursday, July 12,
1:15 pm, et
None Important. Bonds will be auctioned. Strong demand may lead to lower mortgage rates.
U of Michigan Consumer Sentiment Friday, July 13,
10:00 am, et
98.4 Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.


China is an important player in the global recovery following the financial crisis that started in 2008. Their economy continues to expand while other countries falter. China is a major purchaser of commodities, especially copper and iron ore that are used in industrial production. That buying helps many developing countries through the financial crisis. In addition to commodities, China buys US Treasury debt and currently holds in excess of $1.18T. China’s GDP growth in 2010 was 10.4%. That number fell in 2011 to 9.3%. Growth rates in 2012 and 2013 were 7.7%. The rate in 2014 was 7.4% and 6.9% in 2015. The rate bottomed in 2016 to 6.7% and bounced to 6.9% in 2017. There are always lingering questions regarding the accuracy of the economic figures. Some analysts have suspicions that the data could be influenced by the government rather than accurately reflecting current conditions. The Chinese economic growth rate is still sharply higher than most other large economies.

The latest trade tensions have global investors concerned. The U.S. Administration announced intentions to place tariffs on $500B worth of Chinese goods. Beijing indicated they would reply in kind. Global economic uncertainty is increasing.

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