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Mortgage Market in Review – November 20, 2017

   

Market Comment

Mortgage bond prices finished the week near unchanged which held rates steady.  Prices rose the first portion of the week as stocks were weaker.  That trend reversed Thursday as the DOW closed up 187 points and MBS prices sold off.  Producer prices rose 0.4% and the core value, which excludes the volatile food and energy components, rose 0.4%. Economists expected PPI to rise 0.1% and 0.2% respectively.  Consumer prices rose 0.1% and the core value rose 0.2%. Retail sales, an indication of the health of the consumer, rose 0.2%.   All three pieces of data were near estimates.  The Philadelphia Fed survey, an indication of manufacturing activity in the all-important Mid-Atlantic region, printed at 18.9. Traders expected a 24.6 reading.  We ended the week unchanged to better by 1/8 of a discount point.


LOOKING AHEAD

Economic
Indicator
Release
Date & Time
Consensus
Estimate

Analysis
Leading Economic Indicators Monday, Nov. 20,
10:00 am, et
Up 0.2% Important.  An indication of future economic activity.  A smaller increase may lead to lower rates.
Existing Home Sales Tuesday, Nov. 21,
10:00 am, et
5.4M Low importance.  An indication of mortgage credit demand.  Significant weakness may lead to lower rates.
Weekly Jobless Claims Wednesday, Nov. 22,
8:30 am, et
240K Important.  An indication of employment.   Higher claims may result in lower rates.
Durable Goods Orders Wednesday, Nov. 22,
8:30 am, et
Up 2.2% Important.  An indication of the demand for “big ticket” items.  Weakness may lead to lower rates.
U of Michigan Consumer Sentiment Wednesday, Nov. 22,
10:00 am, et
97.9 Important.  An indication of consumers’ willingness to spend.  Weakness may lead to lower mortgage rates.
Fed Minutes Wednesday, Nov. 22,
2:00 pm, et
None Important.  Details of the last Fed meeting will be thoroughly analyzed.
Thanksgiving Holiday Thursday, Nov. 23, None Important.  Shortened trading week may result in some volatility.

Gas Prices

The U.S. Energy Information Administration reported November 13, 2017 that the price of regular gasoline averaged $2.592 per gallon across the country.  The Gulf Coast had the lowest average prices while the West Coast had the highest.  These prices reflect an approximate three cent increase from the prior week and a forty one cent increase from the prior year.

A negative of the rising prices for consumers is a decrease in discretionary spending.  Fuel savings usually give purchasers a boost in spending power and the vast majority of consumers spend that money.  Less money in consumer accounts could result in a decrease in spending the latter portion of this year.  The recent gas price increases aren’t dramatic in the short term but over the year the changes are more dramatic.

Gas prices usually drop after summer travel decreases and less expensive winter blends are sold.  Low gas inventories, adverse weather events, and a solid economy are contributing to the higher prices.  Some analysts predict a drop in prices soon but if price increases continue into the holidays they could dampen consumer spending.

Copyright 2017. 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.