MIG Market Watch, February 1st, 2021
MARKET COMMENT Mortgage bond prices finished the week near unchanged to slightly lower which put a little upward pressure on rates. The market started on a neutral note Monday, moved positive Tuesday, and then saw steady selling pressure the remainder of the week. The Fed left rates unchanged and indicated they “will continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage-backed securities by at least $40 billion per month until substantial further progress has been made toward the Committee’s maximum employment and price stability goals.” Inflation fears were fanned a little Friday morning as Core PCE prices rose 0.3% vs the expected 0.1% increase. Mortgage interest rates finished the week unchanged to worse by approximately 1/8 of a discount point.
LOOKING AHEAD
| Economic Indicator | Release Date & Time | Consensus Estimate | Analysis |
| ISM Index | Monday, Feb. 1, 10:00 am, et | 59.5 | Important. A measure of manufacturer sentiment. Weakness may lead to lower mortgage rates. |
| Construction Spending | Monday, Feb. 1, 10:00 am, et | Up 0.8% | Low importance. An indication of economic strength. Significant weakness may lead to lower rates. |
| ADP Employment | Wednesday, Feb. 3, 8:30 am, et | 40K | Important. An indication of employment. Weakness may bring lower rates. |
| Weekly Jobless Claims | Thursday, Feb. 4, 8:30 am, et | 850K | Important. An indication of employment. Higher claims may result in lower rates. |
| Preliminary Q4 Productivity | Thursday, Feb. 4, 8:30 am, et | Down 2.8% | Important. A measure of output per hour. Improvement may lead to lower mortgage rates. |
| Factory Orders | Thursday, Feb. 4, 10:00 am, et | Up 0.6% | Important. A measure of manufacturing sector strength. Weakness may lead to lower rates. |
| Employment | Friday, Feb. 5, 8:30 am, et | 6.8%, Payrolls +20K | Very important. An increase in unemployment or weakness in payrolls may bring lower rates. |
| Trade Data | Friday, Feb. 5, 8:30 am, et | $66B deficit | Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates. |
| Consumer Credit | Friday, Feb. 5, 3:00 pm, et | $12.1B | Low importance. A significantly large increase may lead to lower mortgage interest rates. |
YELLEN Former Federal Reserve Chair Janet Yellen was sworn in as the Secretary of the Treasury January 26, 2021. According to the US Department of Treasury website, she is “the first person to have served as Treasury Secretary, Chair of the Council of Economic Advisers, and Chair of the Federal Reserve.” The site notes, “The Secretary of the Treasury is the principal economic advisor to the President and plays a critical role in policy-making by bringing an economic and government financial policy perspective to issues facing the government. The Secretary is responsible for formulating and recommending domestic and international financial, economic, and tax policy, participating in the formulation of broad fiscal policies that have general significance for the economy, and managing the public debt.” Yellen is a key economic figure as we navigate the challenges ahead.
