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Mortgage Market in Review – November 16, 2015

Market Comment

Mortgage bond prices finished the week near unchanged which kept rates in check. Trading was negative the beginning of the week tied to comments from Fed officials. San Francisco Federal Reserve Bank President John Williams said the last meeting to keep rates unchanged was a “close call.” He went on to note, “the public or market perceptions were that we had completely moved off 2015, and I don’t think that was accurate.” Cleveland Fed President Mester said the economy can handle a rate increase. The end of the week data helped alleviate some of the earlier weakness. Retail sales and producer prices were lower than expected. Mortgage interest rates finished the week near unchanged despite the volatility.


Date & Time

Consumer Price Index Tuesday, Nov. 17,
8:30 am, et
Down 0.2%,
Core up 0.1%
Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates.
Industrial Production Tuesday, Nov. 17,
9:15 am, et
Up 0.2% Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates.
Capacity Utilization Tuesday, Nov. 17,
9:15 am, et
77.2% Important. A figure above 85% is viewed as inflationary. Weaker figure may lead to lower rates.
NAHB Housing Index Tuesday, Nov. 17,
10:00 am, et
65 Moderately Important. A measure of single family housing. Weakness may lead to lower mortgage rates.
Housing Starts Wednesday, Nov. 18,
8:30 am, et
1213K Important. A measure of housing sector strength. Weakness may lead to lower rates.
Fed Minutes Wednesday, Nov. 18,
2:00 pm, et
None Important. Details of the last Fed meeting will be thoroughly analyzed.
Weekly Jobless Claims Thursday, Nov. 19,
8:30 am, et
272K Important. An indication of employment. Higher claims may result in lower rates.
Philadelphia Fed Survey Thursday, Nov. 19,
10:00 am, et
-3.8 Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
Leading Economic Indicators Thursday, Nov. 19,
10:00 am, et
Down 0.2% Important. An indication of future economic activity. A smaller increase may lead to lower rates.

Industrial Production

The Federal Reserve releases the Industrial Production report each month. It is a real measure of output from manufacturing, mining, electric, and gas utilities. The data is significant in that it provides an indicator of the state of the economy. Analysts use the data to attempt to determine market direction. The Fed uses the data to help set the course for monetary policy. Generally the Fed likes to see steady growth in the economy with little price pressures.

Mortgage interest rates generally react favorably to weaker than expected industrial production data. In times of economic weakness investors often move out of stocks and into mortgage bonds. When things look good investors often move out of bonds and back into stocks. We have seen these patterns in recent months. Floating into significant economic data always has some risk involved. Now is a great time to take advantage of mortgage interest rates.

Copyright 2015. All Rights Reserved. Mortgage Market Information Services, Inc. The information contained herein is believed to be accurate, however no representation or warranties are written or implied.