Market Update 11/14-11/18

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Without further ado- here is this week’s market update:

Market Comment

Mortgage bond prices ended lower last week, which pushed mortgage interest rates slightly higher. The early portion of the week was relatively tame compared to recent trading conditions. Most of the weakness came Thursday following stronger than expected weekly employment figures. Weekly jobless claims came in at 390k, better than the expected 400k mark and generally not bond friendly. Continuing claims came in at 3,615k, which also beat estimates. The reaction was negative and sent rates slightly higher ahead of the extended holiday weekend. Positive stocks also pressured rates at times throughout the week. Mortgage interest rates rose by approximately 1/4 of a discount point for the week.

LOOKING AHEAD

Economic Indicator	Release Date & Time	Consensus Estimate	Analysis
Producer Price Index	Tuesday, Nov. 15, 8:30 am, et	Up 0.4%, Core up 0.2%	Important. An indication of inflationary pressures at the producer level. Weaker figures may lead to lower rates.
Retail Sales	Tuesday, Nov. 15, 8:30 am, et	Up 1.4%	Important. A measure of consumer demand. A smaller than expected increase may lead to lower mortgage rates.
Business Inventories	Tuesday, Nov. 15, 10:00 am, et	Up 0.2%	Low importance. An indication of stored-up capacity. A significantly larger increase may lead to lower rates.
Consumer Price Index	Wednesday, Nov. 16, 8:30 am, et	Up 0.3%, Core up 0.1%	Important. A measure of inflation at the consumer level. Weaker figures may lead to lower rates.
Industrial Production	Wednesday, Nov. 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	Wednesday, Nov. 16, 9:15 am, et	77.2%	Important. A figure above 85% is viewed as inflationary. Weaker figure may lead to lower rates.
Weekly Jobless Claims	Thursday, Nov. 17, 8:30 am, et	387k	Important. An indication of employment. Higher claims may result in lower rates.
Housing Starts	Thursday, Nov. 17, 8:30 am, et	610k	Important. A measure of housing sector strength. Weakness may lead to lower rates.
Philadelphia Fed Survey	Thursday, Nov. 17, 10:00 am, et	6.8	Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.
Leading Economic Indicators	Friday, Nov. 18, 10:00 am, et	Up 0.2%	Important. An indication of future economic activity. A smaller increase may lead to lower rates.

Business Inventories

The report on business inventories basically gives a broader look at the durable goods, factory orders, and retail sales reports. Not only is this report an important part of the investment component of the GDP, but it also provides additional evidence about the economy in the upcoming months. Changes in business inventories slow as the economy approaches a peak, and rise as the economy approaches the trough of a recession. Therefore the change in business inventories is a leading indicator of GDP. The data for this report, which are published by the Department of Commerce’s Census Bureau, comes from a monthly survey of inventories, orders, and manufacturers’ shipments, in addition to the merchant wholesalers and retail trade surveys.

In this environment every piece of data has the potential to cause some volatility.

 

 

Mark Ruhl

NMLS #105591  |  Loan Officer

Mortgage Express

Direct    503.517.9341

Cell         503.317.7620

Fax         503.961.8694

http://www.markruhl.com

 

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Market Update 11/7-11/11

Below is the market forecast for the week starting November 7^th.  For the most part, we have seen rates improve this past week due to the uncertainty in the EU, but the name of the game is still “volatility” 

If you or your borrowers have any questions over the weekend, please feel free to call me anytime on my cell below.  Many lenders are backed up with refinances, but I am still able to accommodate the fabled “quick close”.  I can help you!

Market Comment

Mortgage bond prices ended higher last week, which pushed mortgage interest rates lower. The financial markets remained extremely volatile. Most of the rate improvements came early in the week following Japan’s intervention to weaken the yen and Greek Prime Minister Papandreou’s indication that budget cuts would be put to a public vote. Unfortunately some of those rate improvements were erased when Papandreou retreated on the vote and the European Central Bank made a surprise rate cut. The employment report was mixed with the headline figure of 9% coming in lower than estimates while non-farm payrolls were weaker than expected. Despite the wild swings, mortgage interest rates fell by almost a full discount point for the week.

LOOKING AHEAD

Economic Indicator	Release Date & Time	Consensus Estimate	Analysis
Consumer Credit	Monday, Nov. 7, 3:00 pm, et	$9.56b	Low importance. A significantly large increase may lead to lower mortgage interest rates.
3-year Treasury Note Auction	Tuesday, Nov. 8, 1:15 pm, et	None	Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
10-year Treasury Note Auction	Wednesday, Nov. 9, 1:15 pm, et	None	Important. Notes will be auctioned. Strong demand may lead to lower mortgage rates.
Weekly Jobless Claims	Thursday, Nov. 10, 8:30 am, et	395k	Important. An indication of employment. Higher claims may result in lower rates.
Trade Data	Thursday, Nov. 10, 8:30 am, et	$45b deficit	Important. Affects the value of the dollar. A falling deficit may strengthen the dollar and lead to lower rates.
30-year Treasury Bond Auction	Thursday, Nov. 10, 1:15 pm, et	None	Important. Bonds will be auctioned. Strong demand may lead to lower mortgage rates.
U of Michigan Consumer Sentiment	Friday, Nov. 11, 10:00 am, et	60.5	Important. An indication of consumers’ willingness to spend. Weakness may lead to lower mortgage rates.

Trade Data

In the distant past the US economy tended to be viewed as relatively unaffected by economic activity in other countries. However, increased trades with other countries and an increased reliance on foreign purchases of US debt have generated a market awareness of trade-related issues. The exchange rate of the dollar and foreign trade flows are interrelated. One must buy dollars to purchase US exports, and sell dollars to buy imports. Likewise, foreign investment in US debt requires the purchase of US dollars, and is thus affected by exchange rates.

Each month the Commerce Department gathers an enormous amount of detailed data on exports and imports. The data is broken between goods and services trade. The overall trade balance is the dollar difference between US exports and imports on a seasonally adjusted basis. The report also highlights trade flows between the US and various partners. Since the mid-1970’s, US imports of consumer and capital goods have exceeded exports, so a merchandise trade deficit has existed. The US has always maintained a service trade surplus, and because this surplus is not enough to offset the merchandise trade deficit, a net export deficit has resulted.

Due to the overwhelming amount of data considered, trade is difficult to forecast, and can present surprises. For a variety of reasons, the financial markets will often be unaffected by surprises in trade data. However, the data still has the ability to cause mortgage interest rate volatility.