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Market Comment
Mortgage bond prices finished the week higher, which pushed, rates a little lower. Rates were slightly positive the beginning of the week tied to the weaker than expected data. Industrial production fell 0.1% and capacity utilization printed at 78.9. Traders expected a 0.2% production increase and utilization at 79.3. Producer prices rose 0.2% in October and the core value, which excludes volatile food and energy costs, rose 0.4%. The core figure was higher than the expected 0.1% increase, which was not rate friendly. Weekly jobless claims printed at 291K versus the expected 285K, which was rate friendly. Mortgage interest rates finished the week better by approximately 1/4 of a discount point.
LOOKING AHEAD
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Economic
Indicator
|
Release
Date & Time
|
Consensus
Estimate
|
Analysis
|
| Q3 GDP 2nd Estimate |
Tuesday, Nov. 25,
8:30 am ET |
Up 3.1% |
Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| Consumer Confidence |
Tuesday, Nov. 25,
10:00 am, et
|
94.2 |
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| Weekly Jobless Claims |
Wednesday, Nov. 26,
8:30 am ET |
289k |
Important. An indication of employment. Higher claims may result in lower rates. |
| Durable Goods Orders |
Wednesday, Nov. 26,
8:30 am, et |
Up 0.2% |
Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates. |
| Personal Income and Outlays |
Wednesday, Nov. 26,
8:30 am, et
|
Unchanged,
Up 0.1%
|
Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
| PCE Core Inflation |
Wednesday, Nov. 26,
8:30 am, et
|
Up 0.1% |
Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve. |
| U of Michigan Consumer Sentiment |
Wednesday, Nov. 26,
10:00 am, et
|
89.5 |
Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| New Home Sales |
Wednesday, Nov. 26,
10:00 am, et |
472k |
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
Income and Outlays
The personal income and outlays release is a monthly report issued by the Bureau of Economic Analysis (BEA). The data is important because it is thought to provide a solid indication of future consumer demand. The personal income component is primarily a measure of wages and salaries. The outlays component is primarily a measure of spending on goods and services. Together the figures provide analysts valuable insight into consumer economic standing and consumption.
The prior release showed an increase in wages and salaries but a decrease in spending. If wages falter that could adversely affect consumer spending and the entire US economy. Decreased or stagnant wages coupled with tighter borrowing restrictions make it difficult for consumers to spend money. It is important to note that no single economic indicator can consistently predict the future of the economy. However, the personal income and outlays report is a closely watched release. The consumer remains a vital component of the US economy.
The release this week has the potential to move the financial markets. Now is a good time to take advantage of mortgage interest rates at their current levels to avoid market volatility.
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