Market Comment
Mortgage bond prices finished the week sharply lower which put significant upward pressure on rates. Sentiment shifted greatly regarding future Fed policy. We started on a negative note and continued that pattern for most of the week. Higher than expected consumer inflation readings shook the market. The consumer price index rose 0.4% vs 0.3%. The core, which excludes volatile food and energy prices, also rose 0.4% vs 0.3%. Producer prices rose 0.2% vs 0.3%. The core rose 0.2% as expected. Weekly Jobless claims were 211K vs 215K. Consumer sentiment was 77.9 vs 79 which helped stop the selling pressure to end the week. Mortgage interest rates finished the week worse by approximately 7/8 of a discount point.
Looking Ahead
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| Retail Sales | Monday, April 15, 8:30 am, et | Up 0.3% | Important. A measure of consumer demand. Weakness may lead to lower mortgage rates. |
| NAHB Housing Index | Monday, April 15, 10:00 am, et | 50 | Moderately Important. A measure of single-family housing. Weakness may lead to lower mortgage rates. |
| Housing Starts | Tuesday, April 16, 8:30 am, et | 1.48M | Important. A measure of housing sector strength. Weakness may lead to lower rates. |
| Industrial Production | Tuesday, April 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 | Tuesday, April 16, 9:15 am, et | 78.5% | Important. A figure above 85% is viewed as inflationary. Weaker figure may lead to lower rates. |
| Fed “Beige Book” | Wednesday, April 17, 2:00 pm, et | None | Important. This Fed report details current economic conditions across the US. Signs of weakness may lead to lower rates. |
| Philadelphia Fed Survey | Thursday, April 18, 10:00 am, et | 3.2 | Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates. |
| Existing Home Sales | Thursday, April 18, 10:00 am, et | 4.2M | Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates. |
| Leading Economic Indicators | Thursday, April 18, 10:00 am, et | Up 0.1% | Important. An indication of future economic activity. A smaller increase may lead to lower rates. |
Fed Minutes
The Federal Reserve’s minutes from the last meeting reported a “shift in expectations toward policy rate cuts beginning later in the year, and cumulating to a smaller rate reduction in 2024, than previously assessed. Investors also appeared to have considerably lowered the perceived probability of more substantial rate cuts than in their baseline expectations.” Those statements added fuel to the selling pressure from higher than expected consumer inflation readings earlier in the week. The Fed also noted, “Participants generally commented that they remained highly attentive to inflation risks but that they had also anticipated that therewould be some unevenness in monthly inflation readings as inflation returned to target.” Data will be the key for mortgage rates in the weeks and months ahead. A cautious approach to float/lock decisions is prudent in these volatile times.
