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Mortgage Market in Review – November 17, 2014

Market Comment

Mortgage bond prices finished the week lower which pushed rates a little higher. Rates were slightly negative the beginning of the week tied to the weaker than average Treasury auctions and no significant data. Thursday’s data buffered some of the earlier losses but not enough to turn things positive. Weekly jobless claims came in at 290K versus the expected 280K. Continuing claims were 2.392m versus the expected 2.350m. The data Friday was not rate friendly. Retail sales rose 0.3% versus the expected 0.2% increase. Consumer sentiment came in at 89.4 versus the expected 87.5. Mortgage interest rates finished the week worse by approximately 1/4 of a discount point.


Date & Time

Industrial Production Monday, Nov. 17,
9:15 am, et
Up 0.8% Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates.
Capacity Utilization Monday, Nov. 17,
9:15 am, et
79.1% Important. A figure above 85% is viewed as inflationary. Weaker figure may lead to lower rates.
Producer Price Index Tuesday, Nov. 18,
8:30 am, et
Up 0.1 %,
Core up 0.1%
Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates.
Housing Starts Wednesday, Nov. 19,
8:30 am, et
1022k Important. A measure of housing sector strength. Weakness may lead to lower rates.
Fed Minutes Wednesday, Nov. 19,
2:00 pm, et
None Important. Details of the last Fed meeting will be thoroughly analyzed.
Weekly Jobless Claims Thursday, Nov. 20,
8:30 am, et
287k Important. An indication of employment. Higher claims may result in lower rates.
Consumer Price Index Thursday, Nov. 20,
8:30 am, et
Up 0.1%,
Core up 0.1%
Important. A measure of inflation at the consumer level. Lower than expected increases may lead to lower rates.
Philadelphia Fed Survey Thursday, Nov. 20,
10:00 am, et
6.8 Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
Leading Economic Indicators Thursday, Nov. 20,
10:00 am, et
Up 0.8% Important. An indication of future economic activity. Weakness may lead to lower rates.

Philadelphia Fed

Federal Reserve Banks were created to control the central banking system of the United States. The banks are divided into 12 districts and facilitate the monetary system by moving currency in and out of circulation in accordance with the policies set by the Federal Open Market Committee. The Reserve Banks handle check processing, hold cash reserves and make loans to depository institutions. Each Reserve Bank regulates commercial banks in their district. The twelve districts include Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.

The Philadelphia Fed report is a survey of manufacturing businesses in the Northeast region. The report is valuable due to the timing. It is released before the month is over and is the second regional report released. While there are many other regional reports throughout the month the Philadelphia Fed report is considered to be one of the most valuable. It has historically shown strong correlation with purchasing managers index data and therefore analysts give it considerable attention.


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