Market Comment
Mortgage bond prices finished the week flat to slightly higher which held rates steady. We started the week with slow steady improvements. Rates worsened mid-week in response to higher price pressures. The GDP price index rose 3.1% vs 3%. We recovered the losses to end the week slightly positive. New home sales were 693K vs 668M. Durable goods orders rose 2.6% vs 2.5%. Weekly jobless claims were 207K vs 214K. Q1 GDP rose 1.6% vs 2.4%. Income rose 0.5% as expected. Spending rose 0.8% vs 0.6%. Core PCE, the Fed’s preferred inflation gauge, rose 0.3% as expected. Mortgage interest rates finished the week unchanged to better by approximately 1/8 of a discount point.
Looking Ahead
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Q1 Employment Cost Index | Tuesday, April 30, 8:30 am, et | Up 1.1% | Very important. A measure of wage inflation. Weakness may lead to lower rates. |
| House Price Index | Tuesday, April 30, 10:00 am, et | Up 0.1% | Moderately Important. A measure of single-family housing. Weakness may lead to lower mortgage rates. |
| Consumer Confidence | Tuesday, April 30, 10:00 am, et | 104.5 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
| ADP Employment | Wednesday, May 1, 8:15 am, et | 180K | Important. An indication of employment. Weakness may bring lower rates. |
| ISM Index | Wednesday, May 1, 10:00 am, et | 50 | Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates. |
| Fed Meeting Adjourns | Wednesday, May 1, 2:15 pm, et | No rate changes | Very Important. Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting. |
| Trade Data | Thursday, May 2, 8:30 am, et | $68B deficit | Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates. |
| Factory Orders | Thursday, May 2, 10:00 am, et | Up 1.6% | Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
| Employment | Friday, May 3, 8:30 am, et | 3.8%, Payrolls +180K | Very important. An increase in unemployment or weakness in payrolls may bring lower rates. |
Employment Report
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.
