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Market
Comment
Mortgage bond prices finished the week near unchanged which kept rates steady. Trading exhibited the typical summer doldrums with very little movement up or down. Most changes were within narrow ranges of less than 1/8 of a discount point. The data was mixed. Retail sales rose 0.5% versus the expected 0.2% increase. Productivity rose 2.9%. Analysts looked for an increase of 2.2%. Industrial production rose 0.1%, expected up 0.5%. NAHB housing data was 67 versus an expected reading of 66. Weekly jobless claims were lower than expected. Mortgage interest rates finished the week unchanged to lower by approximately 1/8 of a discount point.
LOOKING
AHEAD
|
Economic
Indicator |
Release
Date &
Time |
Consensus
Estimate |
Analysis
|
| Existing Home Sales |
Wednesday, Aug. 22,
10:00 am, et
|
5.4M
|
Low importance. An indication of mortgage credit demand. Significant weakness may lead to lower rates.
|
| Weekly Jobless Claims |
Thursday, Aug. 23,
8:30 am, et
|
215K
|
Important. An indication of employment. Higher claims may result in lower rates.
|
| FHFA House Price Index |
Thursday, Aug. 23,
10:00 am, et
|
Up 0.6%
|
Moderately Important. A measure of single family house prices. Weakness may lead to lower rates.
|
| New Home Sales |
Thursday, Aug. 23,
10:00 am, et
|
635K
|
Important. An indication of economic strength and credit demand. Weakness may lead to lower rates.
|
| Durable Goods Orders |
Friday, Aug. 24,
8:30 am, et
|
Up 1.2%
|
Important. An indication of the demand for “big ticket” items. Weakness may lead to lower rates.
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Fed MBS Reinvestment
The Fed continues to spend billions of dollars monthly to keep mortgage interest rates low and help the housing market. To ensure the transparency of its agency mortgage-backed securities transactions, the Open Market Trading Desk at the New York Fed publishes historical operational results. Operational results include agency MBS transactions associated with additional asset purchases and reinvestment of principal payments from agency debt and agency MBS in agency MBS, as directed at times by the Federal Open Market Committee (FOMC), as well transactions associated with small value exercises.
The Fed severely curtailed MBS reinvestment from prior years in which they often spent in excess of $40B monthly. Their most recent report indicated “plans to purchase approximately $5.6 billion in its reinvestment purchase operations over the noted monthly period. The next release of tentative reinvestment purchase amounts in agency MBS will be at 3 p.m. on September 14, 2018.” From July 16 to August 13 the Fed purchased $6.7 billion in its reinvestment purchase. The prior 2 periods the Fed spent $12.5 billion and $8.8 billion respectively. Fed reinvestment has decreased over the past 12 months and that pattern is expected to continue.
The amounts published are based on already announced FOMC decisions and make no assumptions about future policy actions. Accordingly, if the FOMC announced a modification to its policy stance with a new policy directive, they would release an updated statement regarding MBS purchases (source: The Federal Reserve Bank of New York.)
Now is a great time to take advantage of the historically favorable mortgage interest rates the Fed has helped to keep low.
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2018. All Rights Reserved. Mortgage Market
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