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Mortgage Market in Review – September 14, 2015

Market Comment

Mortgage bond prices finished the week lower which pushed rates higher. Stock volatility dominated headlines. Higher stocks put selling pressure on mortgage bonds Tuesday when trading resumed after the extended holiday weekend. The data was generally neutral. Weekly jobless claims were 275K as expected. Producer price data caused some concern. PPI was unchanged versus the expected 0.1% decrease. The core, which excludes volatile food and energy, rose 0.3% versus the expected 0.1% increase. 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
Retail Sales Tuesday, Sept. 15,
8:30 am, et
Up 1.2% Important.  A measure of consumer demand.  A smaller than expected increase may lead to lower mortgage rates.
Industrial Production Tuesday, Sept. 15,
9:15 am, et
Up 0.4% Important.  A measure of manufacturing sector strength.  A lower than expected increase may lead to lower rates.
Capacity Utilization Tuesday, Sept. 15,
9:15 am, et
77.8% Important.  A figure above 85% is viewed as inflationary.  Weaker figure may lead to lower rates.
Consumer Price Index Wednesday, Sept. 16,
8:30 am, et
Up 0.1%,
Core up 0.1%
Important.  A measure of inflation at the consumer level.  Weaker figures may lead to lower rates.
NAHB Housing Index Wednesday, Sept. 16,
10:00 am, et
62.4 Moderately Important.  A measure of single family housing.  Weakness may lead to lower mortgage rates.
Weekly Jobless Claims Thursday, Sept. 17,
8:30 am, et
278K Important.  An indication of employment.   Higher claims may result in lower rates.
Housing Starts Thursday, Sept. 17,
8:30 am, et
1.18M Important.  A measure of housing sector strength.  Weakness may lead to lower rates.
Philadelphia Fed Survey Thursday, Sept. 17,
10:00 am, et
7.9 Moderately important.  A survey of business conditions in the Northeast.  Weakness may lead to lower rates.
Fed Meeting Adjourns Thursday, Sept. 17,
2:15 pm, et
No rate changes Important.  No rate change expected but volatility will likely surround the adjournment of this meeting.
Leading Economic Indicators Friday, Sept. 18,
10:00 am, et
Up 0.2% Important.  An indication of future economic activity.  A smaller increase may lead to lower rates.

Fed Turning Point

In 2008 as the world was quaking, the Federal Reserve came to the rescue of the global banking and financial system. Through a series of rate cuts and bond buying sprees, the governing body kept the financial system from imploding. Seven years later most of the metrics the Fed is worried about have healed and it is time to move to the next chapter.

Global traders will stay awake this fall and winter guessing when the Fed will make its first move to tighten interest rates. Floating borrowers and referral sources need to understand how important the Fed meeting’s are in terms of potential volatility. We may not see a rate hike at the meeting this week but volatility is likely.

 


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