Mortgage bond prices finished the week lower which pushed rates higher. Stock volatility dominated headlines. The DOW fell 115 points Monday, 490 points Tuesday and rose 293 points Wednesday. The data was mixed. ADP employment rose 190K versus the expected 202K increase. This was rate friendly. Revised Q2 Productivity rose 3.3% from up 2.8% the prior release. Factory orders rose 0.4% versus the expected 0.9% increase. Weekly jobless claims were 282K versus the expected 273K. Unemployment was 5.1% and payrolls rose 173K. Mortgage interest rates finished the week worse by about 1/8 to 1/4 of a discount point.
Consumer Sentiment
In the US the consumer is often seen as the driving force of the economy. A large percentage of the total economic output is for personal use. Analysts attempt to predict the future spending patterns of consumers to gauge economic activity.
The Michigan consumer sentiment index is one piece of data used to measure consumer attitudes. The index is derived from a telephone survey, which gathers information on consumer expectations of the overall economy. The preliminary report is released around the 10th of each month and then is revised throughout the remainder of the month. It is significant in that it provides a precursor into consumers' willingness to spend in the months ahead. However, many analysts point out that willingness to spend does not always convert to actual expenditures. American consumers continue to spend despite economic uncertainty, liquidity issues, housing market fluctuations, and stock volatility. However, many analysts question whether consumers can continue to buoy the economy. Look for any variation from estimates to cause mortgage interest rate volatility. Signs of eroding consumer confidence could lead to improvements in mortgage interest rates. However, stronger than expected figures could spike rates.
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