Newsletter-February 11th, 2019    
Provided by
Fred Olson
Fred Olson
Mortgage Options
180 S EUCLID AVE
PASADENA, CA 91101
Phone: (818) 429-4313
Fax: (626) 446-4076
E-Mail: fredolson@sbcglobal.net
 
 

Market Comment

Mortgage bond prices finished the week near unchanged which kept rates in check.  Rates started the weak higher despite tame data.  Factory orders were lower than expected.  Productivity rose 1.3% versus and expected 1.7% increase.  Unit labor costs rose 0.9% versus the expected 1.7%.  The 3Y Treasury auction had weak foreign demand.  The U.S. ran a trade deficit of $49.3B. That data was better than estimates of $54B.  The Treasury auction of $19B of 30-year bonds was weak, both indicators of demand were below average.  Stocks shot higher Tuesday and Wednesday only to lose most of the gains Thursday afternoon in a 221-point selloff.  Weekly jobless claims were higher than expected.  Claims came in at 234K versus 220K.  Mortgage interest rates finished the week with discount points near unchanged.


LOOKING AHEAD

Economic
Indicator

Release
Date & Time

Consensus
Estimate


Analysis

Consumer Price Index

Wednesday, Feb. 13,
8:30 am, et

Up 0.1%,
Core up 0.1%

Important.  A measure of inflation at the consumer level.  Weaker figures may lead to lower rates.
Retail Sales-Dec.

Thursday, Feb. 14,
8:30 am, et

Up 1.2%

Important.  A measure of consumer demand.  A smaller than expected increase may lead to lower mortgage rates.
Producer Price Index

Thursday, Feb. 14,
8:30 am, et

Up 0.1%,
Core up 0.1%

Important.  An indication of inflationary pressures at the producer level.  Weaker figures may lead to lower rates.
Weekly Jobless Claims

Thursday, Feb. 14,
8:30 am, et

235K

Important.  An indication of employment.   Higher claims may result in lower rates.
Business Inventories

Thursday, Feb. 14,
10:00 am, et

Up 0.5%

Low importance.  An indication of stored-up capacity.  A significantly larger increase may lead to lower rates.
Retail Sales-Jan.

Friday, Feb. 15,
8:30 am, et

Up 0.4% Important.  A measure of consumer demand.  A smaller than expected increase may lead to lower mortgage rates.
Industrial Production

Friday, Feb. 15,
9:15 am, et

Up 0.4%

Important.  A measure of manufacturing sector strength.  A lower than expected increase may lead to lower rates.
Capacity Utilization

Friday, Feb. 15,
9:15 am, et

78.8% Important.  A figure above 85% is viewed as inflationary.  Weaker figure may lead to lower rates.
U of Michigan Consumer Sentiment

Friday, Feb. 15,
10:00 am, et

91.1 Important.  An indication of consumers’ willingness to spend.  Weakness may lead to lower mortgage rates.

Debt and Deficit

The Federal budget deficit is the difference between what the US Government spends each year and what they bring in.  The national debt is the total of all unpaid obligations borrowed by the US Government.  The Congressional Budget Office projects the federal budget deficit to be about $900 billion in 2019 and to exceed $1 trillion each year beginning in 2022.  The US is bleeding red ink with annual deficits added to $22T in debt. The national debt accelerated after the 2008 financial crisis.  The total has increased $2T over the past 2 years.  The cost to service the growing debt sucks money out of tax receipts that could be used for other things like replacing the crumbling infrastructure.

 

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   MORTGAGE MARKET IN REVIEW Newsletter-February 11th, 2019