Skip to content

Mortgage Market in Review – June 11, 2018

   

Market Comment

Mortgage bond prices finished the week lower which put upward pressure on rates. The first portion of the week was calm as some of the data was weaker than expected. Factory orders came in lower than expected. The Trade deficit was $46.2B versus the expected $48.8B. Productivity rose 0.4% versus the expected 0.6% increase. Volatility emerged Wednesday and Thursday amid stock strength and stronger than expected data. Unit labor costs rose 2.9% versus the expected 2.8%. Rising labor costs stoked wage inflation fears tied to the tight labor market. Weekly jobless claims were 222K. Analysts looked for a higher reading of 225K. We ended the week worse by 1/8 to 1/4 of a discount point.

LOOKING AHEAD

Economic
Indicator
Release
Date & Time
Consensus
Estimate

Analysis
Consumer Price Index Tuesday, June 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.
Producer Price Index Wednesday, June 13,
8:30 am, et
Up 0.2%,
Core up 0.2%
Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates.
Fed Meeting Adjourns Wednesday, June 13,
2:15 pm, et
25 basis point rate increase Important. Most expect the Fed to change rates. Volatility may surround the adjournment of this meeting.
Weekly Jobless Claims Thursday, June 14,
8:30 am, et
220K Important. An indication of employment. Higher claims may result in lower rates.
Retail Sales Thursday, June 14,
8:30 am, et
Up 0.8% Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates.
Business Inventories Thursday, June 14,
10:00 am, et
Up 0.2% Low importance. An indication of stored-up capacity. A significantly larger increase may lead to lower rates.
Industrial Production Friday, June 15,
9:15 am, et
Up 0.6% Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates.
Capacity Utilization Friday, June 15,
9:15 am, et
78.2% Important. A figure above 85% is viewed as inflationary. Weaker figure may lead to lower rates.
U of Michigan Consumer Sentiment Friday, June 15,
10:00 am, et
98.2 Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

PPI

The producer price index is a measure of prices at the producer level and is important because it is the first inflation report to be released each month. Investors are typically able to gain an initial indication of inflationary pressures from the release. If producer prices are increasing, there is a tendency for producers to pass the increases on to consumers in the form of higher priced goods. It is important to note that the PPI is only a measure of goods, while the consumer price index is a measure of goods and services. It is possible for the price of goods to remain stable, while the price of services increases. In this scenario PPI would do little to warn of a change in inflationary pressures, while the CPI report would provide an indication of the inflationary effects of the service component.


Copyright 2018. 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.