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Mortgage Market in Review – October 26, 2015

Market Comment

Mortgage bond prices finished the week slightly lower which nudged rates a little higher. The data was generally solid which didn’t help rates. The NAHB Housing Index printed at 64 versus the expected 62. Housing prices continued to rise with low inventories reported in many markets. Housing starts printed at 1,206K versus the expected 1,150K. That data was better than expected and further proof that the real estate market is on solid footing. Weekly jobless claims were 259K and continuing claims, a summation of all receiving benefits, were 2,170K. Economists expected claims at 265K and continuing claims at 2,198K. Existing home sales printed were 5.55M versus the expected 5.39M. Mortgage interest rates finished the week worse by about 1/8 of a discount point.


LOOKING AHEAD

Economic
Indicator
Release
Date & Time
Consensus
Estimate

Analysis
New Home Sales Monday, Oct. 26,
10:00 am, et
548K Important.  An indication of economic strength and credit demand.  Weakness may lead to lower rates.
Durable Goods Orders Tuesday, Oct. 27,
8:30 am, et
Down 0.8% Important.  An indication of the demand for “big ticket” items.  Weakness may lead to lower rates.
Consumer Confidence Tuesday, Oct. 27,
10:00 am, et
102.8 Important.  An indication of consumers’ willingness to spend.  Weakness may lead to lower mortgage rates.
Fed Meeting Adjourns Wednesday, Oct. 28,
2:15 pm, et
No rate changes Important.  Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting.
Weekly Jobless Claims Thursday, Oct. 29,
8:30 am, et
262K Important.  An indication of employment.   Higher claims may result in lower rates.
Q3 Advance GDP Thursday, Oct. 29,
8:30 am, et
Up 3.8% Very important.  The aggregate measure of US economic production.  Weakness may lead to lower rates.
Personal Income and Outlays Friday, Oct. 30,
8:30 am, et
Up 0.2%,
Up 0.3%
Important.  A measure of consumers’ ability to spend.  Weakness may lead to lower mortgage rates.
PCE Core Inflation Friday, Oct. 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.
Q3 Employment Cost Index Friday, Oct. 30,
8:30 am, et
Up 0.3% Very important. A measure of wage inflation.  Weakness may lead to lower rates.
U of Michigan Consumer Sentiment Friday, Oct. 30,
10:00 am, et
92.4 Important.  An indication of consumers’ willingness to spend.  Weakness may lead to lower mortgage rates.

Fundamental Week

The abundance of fundamental data this week provides a good opportunity for mortgages to improve.  If the data shows weakness in the economy with little or no inflationary pressures then it is possible for mortgage bonds to rally resulting in mortgage interest rate decreases.  However, if the data shows that the economy continues to rebound or any significant signs of inflation, mortgage bonds may fall pushing mortgage interest rates higher.  Mortgage interest rates remain historically favorable despite some recent increases.  Now is a great time to take advantage of these low rates.


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