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Mortgage Market in Review – September 3, 2018

 

Market Comment

Mortgage bond prices finished the week near unchanged which kept rates steady. Stronger than expected data Tuesday and Wednesday put some initial upward pressure on rates. Confidence was 133.4 versus the expected 126.5. Q2 Gross Domestic Product rose 4.2% versus the expected 4%. The losses were reversed the latter portion of the week in response to tame data. Weekly jobless claims were 213K which was in line with forecasts. Core PCE inflation rose 0.2% as expected. Personal income and spending rose as expected. Mortgage interest rates finished the week unchanged.


LOOKING AHEAD

Economic
Indicator
Release
Date & Time
Consensus
Estimate

Analysis
ISM Index Tuesday, Sept. 4,
10:00 am, et
58.5 Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates.
Construction Spending Tuesday, Sept. 4,
10:00 am, et
Down 0.8% Low importance. An indication of economic strength. Significant weakness may lead to lower rates.
Trade Data Wednesday, Sept. 5,
8:30 am, et
$46.4B deficit Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
ADP Employment Thursday, Sept. 6,
8:30 am, et
217K Important. An indication of employment. Weakness may bring lower rates.
Revised Q2 Productivity Thursday, Sept. 6,
8:30 am, et
Up 2.8% Important. A measure of output per hour. Improvement may lead to lower mortgage rates.
Weekly Jobless Claims Thursday, Sept. 6,
8:30 am, et
214K Important. An indication of employment. Higher claims may result in lower rates.
Factory Orders Thursday, Sept. 6,
10:00 am, et
Up 0.8% Important. A measure of manufacturing sector strength. Weakness may lead to lower rates.
Employment Friday, Sept. 7,
8:30 am, et
3.9%,
Payrolls +160K
Very important. An increase in unemployment or weakness in payrolls may bring lower rates.

Employment

The employment report provides an abundance of information for many sectors of the economy and is probably the most important piece of data released each month. Not only does the release give basic employment payroll statistics for the major working sectors, it also provides the average hourly earnings and the average workweek. Economists use this information provided by the Bureau of Labor Statistics (BLS) of the U.S. Department of Labor to estimate many other economic indicators such as industrial production, personal income, housing starts, and GDP monthly revisions. Since there is little data for economists to base their estimates on, the margin of error for the estimates tends to be high. As a result, the employment report can cause substantial market movements. The BLS compiles data from two unrelated surveys that they conduct, the household survey and the establishment survey, in order to complete the report. This explains why there is sometimes a divergence between the unemployment rate and payrolls figure. Be alert heading into the release.


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