MIG Market Watch, June 22nd, 2020
MARKET COMMENT Mortgage bond prices finished the week lower which put upward pressure on rates. The Fed kept their MBS buying relatively constant, but we still saw selling pressure most of the trading days. The data was mixed but some releases surprised with signals of economic strength. Retail sales surged higher by 17.7%. Analysts expected an increase of 9%. Industrial production rose 1.4% vs the expected 3% increase. Capacity use was 64.8% vs 68%. The NAHB housing index was 58 vs the expected 45 reading. Housing starts were 974K vs the expected 1170K. Weekly jobless claims were 1.508M vs the expected 1.3M. Philadelphia Fed was 27.5 vs the expected negative 25. Mortgage interest rates finished the week worse by 1/8 to 1/4 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Existing Home Sales | Monday, June 22, 10:00 am, et | 4.4M | Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates. |
| New Home Sales | Tuesday, June 23, 10:00 am, et | 650K | Important. An indication of economic strength and credit demand. Weakness may lead to lower rates. |
| FHFA House Price Index | Wednesday, June 24, 10:00 am, et | Up 0.4% | Moderately Important. A measure of single family house prices. Weakness may lead to lower rates. |
| Weekly Jobless Claims | Thursday, June 25, 8:30 am, et | 1.4M | Important. An indication of employment. Higher claims may result in lower rates. |
| Durable Goods Orders | Thursday, June 25, 8:30 am, et | Up 0.5% | Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates. |
| Q1 GDP | Thursday, June 25, 8:30 am, et | Down 5% | Very important. The aggregate measure of US economic production. Weakness may lead to lower rates. |
| Personal Income and Outlays | Friday, June 26, 8:30 am, et | Down 0.6%, Up 3.1% | Important. A measure of consumers’ ability to spend. Weakness may lead to lower mortgage rates. |
| PCE Core Inflation | Friday, June 26, 8:30 am, et | Up 0.2% | Important. A measure of price increases for all domestic personal consumption. Weaker figure may help rates improve. |
| U of Michigan Consumer Sentiment | Friday, June 26, 10:00 am, et | 78.9 | Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates. |
EXISTING HOME SALES The National Association of Realtors releases existing home sales data near the end of each month. The data is derived from a sampling of MLS data across the nation. The release shows the current sales rate for existing single-family, coops, and condos. A national figure and four regional figures are provided. The housing market is a critical component of the US economy. A house is usually one of the largest assets a consumer owns. Housing usually leads market recoveries or can signal trouble ahead. The housing industry remains mixed while some areas show strength, others languish. While the release usually is not a big market mover it still has the potential to result in some market volatility and provides a snapshot of the health of the housing industry.
