Mortgage Market in Review – Week Ending 1/27/17

Not much change in mortgage rates this week unless you were quoted a rate on Monday or Tuesday and went to lock it in yesterday or today.  Remember – markets can change quickly, so act promptly when dealing with a mortgage interest rate lock.

Market Comment:

 

Mortgage bond prices finished the week near unchanged which kept rates in check despite some wild volatility.  Rates were sharply lower Monday and Tuesday.  Existing home sales printed at 5.49M units versus the expected 5.55M units.  Stronger than expected housing data Wednesday reversed the improvements.  The FHFA Housing Price Index rose 0.5% versus the expected 0.3% increase.  The DOW broke 20,000 which dominated trading the latter portion of the week.  Stronger stocks often come at the expense of lower bond prices and higher rates.  Weekly jobless claims were 259K.  Analysts expected a reading of 246K.  Rates improved Friday morning after the data.  The economy grew at a 1.9% rate in Q4/2017 which was weaker than the expected 2.2%.  Mortgage interest rates finished the week lower by about 1/8 of a discount point.


LOOKING AHEAD

Economic
Indicator
Release
Date & Time
Consensus
Estimate

Analysis
Personal Income and Outlays Monday, Jan. 30,
8:30 am, et
Up 0.3%,
Up 0.1%
Important.  A measure of consumers’ ability to spend.  Weakness may lead to lower mortgage rates.
PCE Core Inflation Monday, Jan. 30,
8:30 am, et
Up 0.2% Important.  A measure of price increases for all domestic personal consumption.  Weaker figure may help rates improve.
Q4 Employment Cost Index Tuesday, Jan. 31,
8:30 am, et
Up 0.6% Very important. A measure of wage inflation.  Weakness may lead to lower rates.
Consumer Confidence Tuesday, Jan. 31,
10:00 am, et
114 Important.  An indication of consumers’ willingness to spend.  Weakness may lead to lower mortgage rates.
ADP Employment Wednesday, Feb. 1,
8:30 am, et
165K Important.  An indication of employment.  Weakness may bring lower rates.
ISM Index Wednesday, Feb. 1,
10:00 am, et
55 Important.  A measure of manufacturer sentiment.  Weakness may lead to lower mortgage rates.
Fed Meeting Adjourns Wednesday, Feb. 1,
2:15 pm, et
No rate changes Important.  Few expect the Fed to change rates, but some volatility may surround the adjournment of this meeting.
Weekly Jobless Claims Thursday, Feb. 2,
8:30 am, et
260K Important.  An indication of employment.   Higher claims may result in lower rates.
Preliminary Q4 Productivity Thursday, Feb. 2,
8:30 am, et
Up 2.2% Important.  A measure of output per hour.  Improvement may lead to lower mortgage rates.
Employment Friday, Feb. 3,
8:30 am, et
4.7%,
Payrolls +150K
Very important.  An increase in unemployment or weakness in payrolls may bring lower rates.

ECB QE

The European Central Bank jumped back into the trading discussion as Spanish Prime Minister Rajoy expressed concerns about tightening monetary policy too soon.  German officials indicated tightening discussions should start now while other leaders weighed in as growth and inflation escalated more than expected.  The challenge the ECB faces is the fact that stronger countries like Germany want to end the stimulus now and other struggling countries do not.  Uncertainty in the Eurozone generally bodes well for U.S. mortgage backed securities.


Copyright 2017. All Rights Reserved. Mortgage Market Information Services, Inc. www.ratelink.com The information contained herein is believed to be accurate, however no representation or warranties are written or implied.

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