This weeks economic news:
Monday
- No relevant economic data scheduled for release.
Tuesday
- Demand for the 10-year Note auction was much better than expected, though the rates that were bid for were higher than thought also. Overall, the sale can be considered pretty good, especially with the lackluster interest in recent auctions.
Thursday
- January’s Goods and Services Trade Balance reported a $37.3 billion trade deficit in January. This was much lower than expected however, the data is not important enough to directly affect bonds or mortgage rates.
- The Labor Department reported that 462,000 new claims for unemployment benefits were filed last week. This was a decline from the previous week, but slightly higher than the 460,000 that was forecasted.
Friday
- February’s Retail Sales data from the Commerce Department showed a 0.3% increase in sales when a small decline was expected. Even if more volatile auto sales are excluded, sales exceeded forecasts by a wide margin. This led to the negative open in bonds and this morning’s increase in mortgage rates because the data indicates consumers were spending more than thought. That raises expectations of economic growth that usually makes bonds and long-term securities less appealing to investors.
- The University of Michigan who said their Index of Consumer Sentiment stood at 72.5 this month. This was lower than forecasts and means surveyed consumers were less optimistic about their own financial situations than many had thought. This is the good news of the morning because waning confidence usually means consumers are less likely to make a large purchase in the near future.
©Mortgage Commentary 2010 Please E-mail us your opinion of this report
Weekly Economic Update – March 15, 2010
This weeks economic news:
Monday
- No relevant economic data scheduled for release.
Tuesday
- The Commerce Department reported that February’s Housing Starts fell 5.9% last month, though analysts were expecting a slightly larger drop.
- The FOMC meeting adjourned with an announcement of no change to key short-term interest rates. The Fed left the language in the recent statements that indicate that rates will remain near current levels for some time. This is good news for the bond market and mortgage rates as it means that the Fed is still concerned about an economic recovery.
Wednesday
- The Labor Department reported a 0.6% decline in February’s Producer Price Index (PPI). This was much weaker than expected, but the core data reading rose 0.1%, matching forecasts. This means that prices at the producer level of the economy fell more than thought, but if food and energy prices are excluded there was no surprise. That can be considered neutral to good news for bonds and mortgage rates because it indicates inflation did not rise more than predicted last month—at least not at the producer level of the economy.
Thursday:
- The Labor Department reported that February’s Consumer Price Index (CPI), the important measurement of inflation at the consumer level of the economy, was unchanged from January. This was slightly weaker than thought. The Core Data reading, excluding the more volatile food and energy prices, increased 0.1% which matched forecasts.
- The Labor Department reported that 457,000 new claims for unemployment benefits were filed last week. This was a little higher than what was expected.
- The Conference Board posted its Leading Economic Indicators (LEI) for February revealing a 0.1% increase, meaning economic activity should expand slightly over the next several months. This is index is considered to be moderately important to the markets and mortgage rates, so its influence on rates is fairly minimal also.
Friday
©Mortgage Commentary 2010
This weeks economic news:
Monday
- No relevant economic data scheduled for release.
Tuesday
- No relevant economic data scheduled for release.
Wednesday
- The Fed Beige Book report to be released at 2:00 PM ET. It details economic activity throughout the country by region. The Fed relies heavily on this data during their FOMC meetings, so look for a potential reaction during afternoon trading. It probably will not cause a major sell off in the stock or bond markets, but could cause enough movement in bond prices to possibly improve or worsen mortgage rates slightly if it reveals any significant surprises.
Thursday
- The revised 4th quarter Productivity Index showed an upward revision to an annual rate of 6.7%. This was higher than the preliminary reading of last month and better than forecasts. That means that employees were more productive in quarter than thought, which is good news for bonds and mortgage rates. This is because the economy can grow easier without inflation concerns when productivity is high.
- January’s Factory Orders revealed a 1.7% increase in new orders for durable and non-durable goods. This was close to forecasts, but December’s orders were revised higher by 0.5%.
- The Labor Department reported that last week’s unemployment figure of 469,000 new claims for benefits were filed last week. This was a sizable drop from the previous week, but nearly matched forecasts. It also has not affected today’s mortgage pricing.
Friday
- The Labor Department reported that the U.S. unemployment rate remained at 9.7% last month when forecasts had called for a 0.1% increase. The number of jobs lost in the month came in at 36,000 when analysts were expecting a loss of 65,000 jobs. Both of these readings were negative for bonds and mortgage rates and positive for the stock markets since it paints less of a grim picture in the labor market as thought.
- Average hourly earnings reading that rose 0.1%. It was expected to show an increase of 0.2%, meaning income costs did not rise as much as thought. This is an indicator of wage inflation, so the lower the increase, the better for bonds.
©Mortgage Commentary 2010 Please E-mail us your opinion of this report
This weeks economic news:
Monday:
- No important economic data scheduled for release
Tuesday
- The Conference Board reported February’s Consumer Confidence Index (CCI) of 46.0 which was well below forecasts of a 55.0 reading. This means that consumers were far less optimistic about their own financial situations than many had thought. This is very good news for the bond market and mortgage rates because waning levels of confidence usually translates into lower levels of consumer spending.
Wednesday
- January’s New Home Sales report a 11.2% drop in sales of newly constructed homes. That indicates that the housing sector is not as stable as some wanted to believe and can be good news for the bond market. However, this data covered only approximately 15% of all home sales in the U.S. Friday’s Existing Home Sales report tracks the other 85% of sales.
- Chairman Bernanke is in the process of delivering the Fed’s semi-annual testimony on the status of the economy to the House Financial Services Committee. During his prepared statement he indicated concern about the employment sector and the unemployment rate that is expected to remain high for quite some time. He also said that he expects inflation to remain under control. Both were good news for the bond market and helped move bonds into positive ground.
Thursday
- January’s Durable Goods Orders report showed a surprising 3.0% increase in new orders for big-ticket items. This was much larger than the 1.4% increase that was expected, however, an upward revision of 0.9% to December’s orders made the month-to-month change less drastic. Also, a reading within the report that tracks new orders for products not attributed to transportation related items actually fell 0.6% when it was expected to rise. This means that overall new orders rose more than expected, but when more volatile transportation related orders are excluded, new orders fell short of forecasts. We can consider these results neutral or slightly favorable to bonds.
- The Labor Department gave us last week’s unemployment figures, announcing that 496,000 new claims for benefits were filed last week. This was much higher than expected and just a bit shy of the important benchmark of 500,000. It also means that new claims rose 12% over the past two weeks, raising concerns that the employment crisis may be worsening before it gets much better. This data usually has little impact on the markets, but the back-to-back spikes have influenced bonds and mortgage rates favorably this morning.
- Also worth noting are the second day of testimony from Fed Chairman Bernanke and the 7-year Treasury Note auction. Mr. Bernanke is expected to repeat yesterday’s speech to the Senate Banking committee today, so it will likely have little influence on trading and mortgage rates unless the Q & A portion of the proceeding reveals any surprises. Yesterday’s 5-year Note auction did not go very well, so there is little expectation that today’s 7-year sale will go much better.
Friday
- The 4th quarter GDP revision came in a little higher or stronger than last month’s previous estimate of 5.7%. Today’s release showed a 5.9% rate of growth, meaning economic activity was stronger than many had thought. This headline number is bad news for bonds and mortgage rates because a strengthening economy raises inflation concerns and make bonds less appealing to investors.
- The University of Michigan updated their Index of Consumer Sentiment for February announced a reading of 73.6 that was close to forecasts. It is a slight decline from the previous estimate.
- January’s Existing Home Sales data from the National Association of Realtors reported a 7.2% decline in home resales last month when a small increase was expected. This dropped sales to their lowest level since last summer, indicating that the housing sector still has some hurdles to tackle. This can be considered favorable news for bonds, but the data usually does not heavily influence trading or mortgage rates.
©Mortgage Commentary 2010 Please E-mail us your opinion of this report
This weeks economic news:
Monday:
- The financial markets are closed today in observance of the President’s Day Holiday
Tuesday
- No important economic data scheduled for release
Wednesday
- January’s Housing Starts revealed a larger than expected increase in starts and an upward revision to December’s starts, hinting that the housing sector may be stronger than thought. Rising starts of new homes indicates more sales or stronger levels of optimism by builders.
- January’s Industrial Production data showed a 0.9% increase in output at U.S. factories, mines and utilities that exceeded forecasts. That indicates a level of manufacturing sector strength that is considered bad news for bonds and mortgage rates. However, this data is considered only moderately important, so it has not hurt mortgage rates this morning.
Thursday
- The Labor Department reported that January’s Producer Price Index (PPI) rose 1.4% while the core data reading rose 0.3%. Both of these readings were well above forecasts, meaning inflationary pressures were stronger at the producer level of the economy than many had thought. This is certainly bad news for the bond market and mortgage rates because inflation erodes the value of a bond’s future fixed interest payments, making them less appealing to investors. They are then sold at a discount, leading to higher yields and rising mortgage rates.
- The Conference Board reported that January’s Leading Economic Indicators (LEI) increased 0.3% which was below expectations. That means that the data is predicting a slower pace of economic growth over the next several months than the markets were expecting.
- The release of the FOMC meeting minutes didn’t reveal many surprises. The most notable was a minor upward revision of their expectation for this year’s unemployment rate. They also reiterated a prolonged period of high unemployment and slightly raised inflation targets for this year.
Friday
- The Labor Department’s January’s Consumer Price Index (CPI) showed a 0.2% increase in the overall reading and a 0.1% decline in the more important core reading. Both were below forecasts, meaning that inflationary pressures were calmer at the consumer level of the economy last month than many had thought. This can be considered favorable news for the bond market and mortgage rates, however, this morning’s news has failed to influence bond buying.
©Mortgage Commentary 2010 Please E-mail us your opinion of this report
This weeks economic news:
Monday:
- No important economic data scheduled for release
Tuesday
- No important economic data scheduled for release
Wednesday
- December’s Goods and Services Trade Balance revealed a $40.2 billion trade deficit that was much larger than expected.
Thursday
- The Labor Department reported that 440,000 new claims for unemployment benefits were filed last week. This was much lower than expected, indicating that the labor market may have been stronger than thought last week. However, since this data covers only a single week, it usually does not heavily influence bond trading or mortgage rates.
- Wednesday’s 10-year Note auction did not go very well, leading to afternoon selling in bonds and this morning’s increase in mortgage pricing.
Friday
- The Commerce Department reported that retail level sales rose 0.5% last month. This matched forecasts for the most part, meaning consumers spent no more than was thought.
- The Commerce Department revised December’s sales 0.2% better than previously thought.
- February’s preliminary reading to the University of Michigan Index of Consumer Sentiment revealed a reading of 73.7. This was a decline from January’s reading and lower than forecasts were calling for. This means that consumers are less optimistic about their own financial situations this month than many had thought. That is considered good news for the bond market and mortgage rates because waning consumer confidence usually translates into weaker levels of consumer spending.
- Thursday’s 30-year Bond sale also was met with a lackluster interest from investors. This was no surprise and neither was the minimal reaction to the results once they were posted Thursday afternoon.
©Mortgage Commentary 2010 Please E-mail us your opinion of this report
This weeks economic news:
Monday:
- No relevant economic data scheduled for release.
Tuesday:
- No relevant economic data scheduled for release.
Wednesday:
- The Institute for Supply Management released their services index indicating a reading of 50.5. This was a little lower than analysts had expected.
Thursday:
- No relevant economic data scheduled for release.
Friday:
- The Labor Department monthly Employment report gave mixed results.
- The unemployment rate dropped to 9.7% which was well below the 10.0% expected by analysts.
- 20,000 jobs when lost when new payrolls had been expected to be up 15,000.
- December’s payroll numbers were revised downward to 150,000 from 85,000 reported in January.
Morgage Commentary 2009
This weeks economic news:
Monday:
- The National Association of Realtors reported that home resales fell a whopping 16.7% last month. Analysts were expecting to see a sizable decline in sales, but this was much larger than thought. The surprising drop indicates that the housing sector still is not stable, which is good news for the bond market and mortgage rates. Though some of the loss is being attributed to the initial expiration of the home buyer tax credit, this raises further concerns about the housing sector and makes a broader economic recovery less likely to be in the near future.
Tuesday:
- The Conference Board released the Consumer Confidence Index (CCI), for January, reporting a reading of 55.9 that exceeded forecasts by over two points. This can be considered negative news for bonds because it indicates that consumers may be more willing to make large purchases in the near future. Since consumer spending makes up two-thirds of the U.S. economy, any related data is watched closely.
Wednesday
- The Commerce Department reported that December’s New Home Sales fell 7.6% last month. That was a much larger decline than was expected and helps support the theory that the housing market still has some troubles to overcome.
Thursday
- December’s Durable Goods Orders revealed a 0.3% increase in new orders for big-ticket products. This was short of analysts’ forecasts of a 2.0% increase. However, if more volatile transportation related orders are excluded, such as orders for new aircraft, we saw a larger than expected increase of 0.9%. Therefore, this report basically gives us mixed results, but should be considered slightly negative for bonds and mortgage rates.
- The Labor Department reported that 470,000 new claims for unemployment benefits were filed last week. This was a decline from the previous week, but was much higher than the 450,000 that were expected. This is good news for bonds.
Friday
- The initial reading of the 4th Quarter Gross Domestic Product (GDP) revealed a 5.7% annual rate of growth during the last quarter of 2009. This was much better than expected and the fastest pace in six years, indicating that the economy is likely growing at a faster pace than many had thought. That creates a negative for bonds because once the economy begins to gain momentum, inflations concerns will rise in the markets.
- The 4th Quarter Employment Cost Index (ECI) revealed a 0.5% increase in employer costs for wages and benefits. This was higher than expected.
- The University of Michigan’s Index of Consumer Sentiment for January was revised upward to 74.4. This index measures consumer confidence, which is thought to indicate consumer willingness to spend.
Morgage Commentary 2009
This weeks economic news:
Monday:
- Markets closed in observance of Martin Luther King.
Thursday:
- The Labor Department reported that 482,000 new claims for unemployment benefits were filed last week. This was much higher than the 440,000 that was expected and hints that further weakness in the employment sector may be ahead.
- The Conference Board, who is a New York-based business research group, posted December’s Leading Economic Indicators (LEI) late this morning. They reported a surprising 1.1% jump, well over the 0.7% increase that was expected. This means that they are predicting a rapid increase in economic activity over the next three to six months. While that is more of a prediction than factual results, if it is an accurate forecast it would not bode well for bonds and mortgage rates in the near future.
Friday:
- No relevant economic news scheduled for release.
Morgage Commentary 2009
This weeks economic news:
Monday:
- The Institute for Supply Management (ISM) posted their manufacturing index for December. They reported a reading of 55.9, meaning that manufacturer sentiment about business conditions was stronger than thought. This normally is bad news for bonds and mortgage rates since it points towards a strengthening manufacturing sector.
Tuesday:
- No relevant economic news scheduled for release.
Wednesday:
- No relevant economic news scheduled for release.
Thursday:
- The Labor Department said this morning that 434,000 new claims for unemployment benefits were filed last week. This was a little lower than forecasts, but not enough to affect the markets or mortgage pricing.
- Yesterday’s FOMC minutes did give us some interesting insight to the Fed’s current thought process and concerns. It appears that there is some concern whether more efforts will be need to keep the economy from stalling again. There was particular concern about the housing market and if more action will be needed to keep lending rates low. That could bode well for mortgage shoppers since the last time the Fed announced they were buying bonds targeted at the housing market, mortgage rates dropped significantly. Another round of buying by the Fed could have similar results. I believe we will hear more about this option in the coming weeks and months.
Friday:
- The Labor Department reported that the U.S. unemployment rate held at 10.0% and that 85,000 jobs were lost last month. The unemployment was expected to be unchanged, but the lost payrolls were worse than many had thought. The report also revealed a relative minor upward change in November’s payrolls, revising from a loss of 11,000 to a gain of 4,000 jobs. But even with that revision, December’s loss indicates that the employment sector was weaker than many had thought.
Morgage Commentary 2009