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Mortgage Market in Review – June 22, 2015

Market Comment

Mortgage bond prices finished the week higher, which pushed rates lower. Trading was volatile amid mixed data. Consumer prices rose 0.4% in May and the core rose 0.1%. Analysts expected CPI to rise 0.5% and the core to rise 0.2%. This was rate friendly. Philadelphia Fed was 15.2 versus the expected 8 reading. The NAHB Housing Market Index printed above expectations at 59 versus the expected 56 mark. This was not rate friendly. Rates improved in response to the Fed meeting in which the Fed indicated, “The U.S. economy hit a soft patch earlier this year.” Mortgage interest rates finished the week better by about 3/8 to 1/2 of a discount point.

LOOKING AHEAD

Economic
Indicator
Release
Date & Time
Consensus
Estimate

Analysis
Existing Home Sales Monday, June 22,
10:00 am, et
5.04M Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates.
Durable Goods Orders Tuesday, June 23,
8:30 am, et
Up 0.6% Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates.
FHFA House Price Index Tuesday, June 23,
10:00 am, et
Up 0.5% Moderately Important. A measure of single family house prices. Weakness may lead to lower rates.
New Home Sales Tuesday, June 23,
10:00 am, et
525K Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
Treasury Auctions Begin Tuesday, June 23,
1:15 pm, et
None Important. 2Y Notes on Tuesday, 5Y Notes on Wednesday, and 7Y Notes on Thursday.
Q1 GDP Revision Wednesday, June 24,
8:30 am, et
Up 0.2% Important. The aggregate measure of US economic production. Weakness may lead to lower rates.
Weekly Jobless Claims Thursday, June 25,
8:30 am, et
272K Important. An indication of employment. Higher claims may result in lower rates.
Personal Income and Outlays Thursday, June 25,
8:30 am, et
Up 0.2%,
Up 0.2%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
PCE Core Inflation Thursday, June 25,
8:30 am, et
Up 0.2% Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve.
U of Michigan Consumer Sentiment Friday, June 26,
10:00 am, et
94.5 Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

New Home Sales

New Home Sales data is compiled monthly by the Department of Commerce’s Census Bureau and is gathered from builders throughout the country. The data represents new home sales for the nation as well as four areas of the country: the Northeast, the Midwest, the South, and the West. Information on the average price of a home, the number of homes for sale, and the supply of unsold homes are also provided. The data is an important indicator because it shows any strength or weakness in the housing sector. The housing sector data is valuable because when consumer spending changes, it appears in this sector first. Consequently, a chain reaction typically occurs. A slowdown in new home sales tends to lead to a slowdown in housing starts, which will continue to affect other indicators possibly continuing the economic worries, as has been the recent concern of most everyone. New Home Sales data is often volatile and difficult to predict. Most analysts look at a three-month average in order to see any trends in the growth rate. The data remains significant in showing the condition of housing.


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