| Market Comment
Mortgage bond prices finished the week lower which put upward pressure on rates. The week started on a negative note amid no domestic data and strength out of the eurozone. Tame inflation readings mid-week helped counter some of the weakness. Producer prices fell 0.1% and the core value, which excludes the volatile food and energy costs, also fell 0.1%. Economists expected both components of PPI to rise 0.2%. The consumer price index rose 0.2% as expected. However, the core rose 0.1% versus an expected 0.2% increase. Weekly jobless claims were 204K versus an expected 210K. Retail sales were weaker than expected but consumer sentiment figures were strong Friday morning which left us negative that morning. Mortgage interest rates finished the week worse by 1/8 to 1/4 of a discount point.
LOOKING AHEAD
Economic
Indicator |
Release
Date & Time |
Consensus
Estimate |
Analysis |
| NAHB Housing Index |
Tuesday, Sept. 18,
10:00 am, et |
68 |
Moderately Important. A measure of single family housing. Weakness may lead to lower mortgage rates. |
| Housing Starts |
Wednesday, Sept. 19,
8:30 am, et |
1170K |
Important. A measure of housing sector strength. Weakness may lead to lower rates. |
| Weekly Jobless Claims |
Thursday, Sept. 20,
8:30 am, et |
206K |
Important. An indication of employment. Higher claims may result in lower rates. |
| Philadelphia Fed Survey |
Thursday, Sept. 20,
10:00 am, et |
12.5 |
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates. |
| Existing Home Sales |
Thursday, Sept. 20,
10:00 am, et |
5.35M |
Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates. |
| Leading Economic Indicators |
Thursday, Sept. 20,
10:00 am, et |
Up 0.6% |
Important. An indication of future economic activity. Weakness may lead to lower rates. |
| 10-year Treasury TIPS Auction |
Thursday, Sept. 20,
1:15 pm, et |
None |
Important. TIPS will be auctioned. Strong demand may lead to lower mortgage rates. |
Housing Starts
Housing starts data is a leading indicator of the state of our economy. This report, provided by the Bureau of the Census, takes into account data from both single-family homes and multi-family dwellings. Building permits are also released with the housing starts data. By knowing the number of permits issued monthly, analysts can attempt to estimate for the upcoming months. Normally, starts are 10% higher than permits since all locations are not required to have a building permit.
Housing starts and permits give a warning of future economic activity. In effect, a rise in housing starts can lead to a fall in the bond market and vice versa. Consumers tend to hold off on the purchase of new homes, new cars, and other big-ticket items if they are worried about the future of the economy. Housing is an important part of our economy. Declines in housing starts can lead to economic slowdown. On the other hand, increases in housing starts can signal positives for the economy. From the opposite perspective, changes in interest rates often lead to changes in housing starts. Higher interest rates can cause a significant decline in home sales, which can lead to a drop in housing starts. Just the opposite happens when rates remain low. Low mortgage rates affect both home sales and housing starts.
Copyright 2018. 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.
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