Market Comment
Mortgage bond prices finished the week near unchanged which held rates in check. We started the week on a slightly positive note, sold off mid-week, and rallied to end the week. There were very few economic releases and most of the changes were within a very narrow range. Federal Reserve Governor Bowman said she doesn’t expect the Fed to cut rates this year due to persistent inflation. The Treasury auctions were well-bid with solid foreign demand. Consumer credit was $6.27B vs the expected $15B. Weekly jobless claims were 231K vs 210K. Michigan consumer sentiment was 67.4 vs 76. Mortgage interest rates finished the week with discount points near unchanged.
Looking Ahead
|
Economic Indicator |
Release Date & Time |
Consensus Estimate |
Analysis |
| Producer Price Index |
Tuesday, May 14, 8:30 am, et |
Up 0.2%, Core up 0.2% | Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates. |
| Consumer Price Index |
Wednesday, May 15, 8:30 am, et |
Up 0.3%, Core up 0.3% |
Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates. |
| Retail Sales |
Wednesday, May 15, 8:30 am, et |
Up 3.8% |
Important. A measure of consumer demand. Weakness may lead to lower mortgage rates. |
| NAHB Housing Index |
Wednesday, May 15, 10:00 am, et |
51 |
Moderately Important. A measure of single-family housing. Weakness may lead to lower mortgage rates. |
| Weekly Jobless Claims |
Thursday, May 16, 8:30 am, et |
220K |
Important. An indication of employment. Higher claims may result in lower rates. |
| Housing Starts |
Thursday, May 16, 8:30 am, et |
1.41M |
Important. A measure of housing sector strength. Weakness may lead to lower rates. |
| Philadelphia Fed Survey |
Thursday, May 16, 8:30 am, et |
18.8 |
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates. |
| Leading Economic Indicators |
Friday, May 17, 10:00 am, et |
Down 0.2% |
Important. An indication of future economic activity. A smaller increase may lead to lower rates. |
Retail Sales
Retail sales data is the first indication of weakness or strength in consumer spending released each month. The Bureau of the Census of the US Department of Commerce provides information on how much the consumer spends on the purchase of goods. This data provides the consumption part of the gross domestic product. Retail sales data represents merchandise sold for cash or credit by retailers. Durable goods, such as autos, make up 35% of the figure. The balance consists of non-durables such as gasoline, restaurants, and general merchandise. There are several drawbacks to the report. The data covers purchases of goods only, not services. It is also not adjusted for inflation and is extremely volatile. Economists are concerned that the current economic uncertainty, higher interest rates, and recessionary fears will curtail consumer spending.
The data this week will provide a good picture of how higher prices are impacting consumer purchases. Signs of tame inflation and weak consumer spending could help rates improve. However, signs that inflation remains high and consumer spending remains strong could push rates higher. A cautious approach to float/lock decisions is prudent.
