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Market Comment
Mortgage bond prices finished the week slightly higher helping rates improve.The market remained relatively stable.Political changes in France put into question the willingness of euro zone countries to continue austerity measures.Greece failed to put a coalition government in place and Spain stepped in to rescue one of their largest banks.This increased concerns that Greece will eventually leave the Euro.Flight to quality buying of US debt instruments continued as a result.The 30Y bond auction showed decent foreign demand.Mortgage interest rates finished the week better by about 1/8 of a discount point.
LOOKING AHEAD
|
Economic
Indicator
|
Release
Date & Time
|
Consensus
Estimate
|
Analysis
|
| Retail Sales |
Tuesday, May 15,
8:30 am, et
|
Up 1.4% |
Important.A measure of consumer demand.A smaller than expected increase may lead to lower mortgage rates. |
| Consumer Price Index |
Tuesday, May 15,
8:30 am, et
|
Up 0.3%,
Core up 0.1%
|
Important.A measure of inflation at the consumer level.Weaker figures may lead to lower rates. |
| Housing Starts |
Wednesday, May 16,
8:30 am, et
|
610k |
Important.A measure of housing sector strength.Weakness may lead to lower rates. |
| Industrial Production |
Wednesday, May 16,
9:15 am, et
|
Up 0.2% |
Important.A measure of manufacturing sector strength.A lower than expected increase may lead to lower rates. |
| Capacity Utilization |
Wednesday, May 16,
9:15 am, et
|
77.2% |
Important.A figure above 85% is viewed as inflationary.Weaker figure may lead to lower rates. |
| Fed Minutes |
Wednesday, May 16,
2:00 pm, et
|
None |
Important.Details of the last Fed meeting will be thoroughly analyzed. |
| Weekly Jobless Claims |
Thursday, May 17,
8:30 am, et
|
425k |
Important.An indication of employment.Higher claims may result in lower rates. |
| Philadelphia Fed Survey |
Thursday, May 17,
10:00 am, et
|
-10.4 |
Moderately important.A survey of business conditions in the Northeast.Weakness may lead to lower rates. |
| Leading Economic Indicators |
Thursday, May 17,
10:00 am, et
|
Up 0.2% |
Important.An indication of future economic activity.A smaller increase may lead to lower rates. |
| 10-year Treasury TIPS Auction |
Thursday, May 17,
1:15 pm, et
|
None |
Important.TIPS will be auctioned.Strong demand may lead to lower mortgage rates. |
Industrial Production
The Federal Reserve releases the Industrial Production report each month.It is a real measure of output from manufacturing, mining, electric, and gas utilities.The data is significant in that it provides an indicator of the state of the economy.Analysts use the data to attempt to determine market direction.The Fed uses the data to help set the course for monetary policy.Generally the Fed likes to see steady growth in the economy with little price pressures.
Mortgage interest rates generally react favorably to weaker than expected industrial production data.In times of economic weakness investors often move out of stocks and into mortgage bonds.When things look good investors often move out of bonds and back into stocks.We have seen these patterns frequently in recent months.Floating into significant economic data always has some risk involved.Now is a great time to take advantage of mortgage interest rates at these historically low levels.
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