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Mortgage Market in Review – May 30, 2017

   

Market Comment

Mortgage bond prices finished the week near unchanged which kept rates in check. Rates started slightly better Monday and Tuesday morning amid no data. There was a selloff Tuesday afternoon which was reflected in pricing Wednesday morning. The economic releases later in the week were mixed. The FHFA Housing price index was up 0.6% versus the expected 0.8% increase. Existing home sales were weaker than expected. Weekly jobless claims printed at 234K. Analysts expected a reading of 238K. The Treasury auctions generally showed solid demand. Durable goods orders fell 0.7%. Analysts expected a 1.8% decrease. The GDP 2nd Estimate rose 1.2% versus the expected 0.8% increase. Consumer sentiment came in at 97.1 versus the expected 97.7. Mortgage interest rates finished the week better by approximately 1/8 of a discount point.


LOOKING AHEAD

Economic
Indicator
Release
Date & Time
Consensus
Estimate

Analysis
Personal Income and Outlays Tuesday, May 30,
8:30 am, et
Up 0.3%,
Up 0.1%
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates.
PCE Core Inflation Tuesday, May 30,
8:30 am, et
Up 0.1% Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve.
Consumer Confidence Tuesday, May 30,
10:00 am, et
120.4 Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.
Fed “Beige Book” Wednesday, May 31,
2:00 pm, et
None Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates.
ADP Employment Thursday, June 1,
8:30 am, et
188K Important. An indication of employment. Weakness may bring lower rates.
Weekly Jobless Claims Thursday, June 1,
8:30 am, et
235K Important. An indication of employment. Higher claims may result in lower rates.
Revised Q1 Productivity Thursday, June 1,
8:30 am, et
Up 0.1% Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
ISM Index Thursday, June 1,
10:00 am, et
55 Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
Employment Friday, June 2,
8:30 am, et
4.4%,
Payrolls +195K
Very important. An increase in unemployment or weakness in payrolls may bring lower rates.
Trade Data Friday, June 2,
8:30 am, et
$44.2B deficit Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.

Core PCE Inflation Data

The US Department of Commerce’s Bureau of Economic Analysis releases the core PCE price index. The report provides the average increase in costs for personal consumption expenditures. PCE is significant in that the Fed uses it in determining inflation as opposed to the prior use of the consumer price index. The PCE includes the price of spending for and on behalf of households. This includes health care spending paid for a household by a business. The CPI only reflects out of pocket expenses paid directly by consumers.


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