Mortgage Market Review - 6/14/10

This Morning…Monday, June 14, 2010:
There is no relevant economic data being posted today or tomorrow, so look for any further changes in mortgage rates to come as a result of changes in the stock markets. The mortgage market started weaker this morning with the stock market opening stronger after reversing late on Friday. Industrial production data from Europe this morning was better than expected boosting Europe's stock markets. At 9:30 the DJIA opened +75 and interest rates are slightly worsened.

Last Week:
Mortgage bond prices fell last week pushing mortgage interest rates higher. Trading was positive for the week through Wednesday’s close. The data generally was benign causing no large mortgage bond market swings. Unfortunately a strong 273-point jump in the DOW Thursday resulted in mortgage rates worsening that afternoon. Fortunately bond prices recovered some Friday, as the stocks were unable to hold those gains. The mortgage market whipped around all week and ended about unchanged on the week.

This Week:
For economic news, there is none scheduled for today. Tomorrow we'll see some import & export price information, along with some manufacturing numbers out of New York. Wednesday will contain the Producer Price Index, Housing Starts, and Industrial Production and Capacity Utilization. Thursday is the big day with Initial Claims, the Consumer Price Index, Leading Economic Indicators, and the Philly Fed survey. Some say that the inflation reports are important, others say that inflation is not a concern, and are more interested in the industrial production and jobless claims numbers. Either way, stay tuned!

EconomicIndicator
Housing Starts
Wednesday, June 16,8:30 am, et
Down 2.5%
Important. A measure of housing sector strength. Larger than expected decreases may lead to lower rates.
Producer Price Index
Wednesday, June 16,8:30 am, et
Down 0.4%,Core up 0.1%
Important. An indication of inflationary pressures at the producer level. Lower figures may lead to lower rates.
Industrial Production
Wednesday, June 16,9:15 am, et
Up 0.7%
Important. A measure of manufacturing sector strength. A lower than expected increase may lead to lower rates.
Capacity Utilization
Wednesday, June 16,9:15 am, et
74.2%
Important. A figure above 85% is viewed as inflationary. A decrease may lead to lower rates.
Weekly Jobless Claims
Thursday, June 17,8:30 am, et
450K
Important. An indication of US employment situation. A higher figure should help rates.
Consumer Price Index
Thursday, June 17,8:30 am, et
Down 0.1%Core up 0.1%
Important. A measure of inflation at the consumer level. Lower figures may lead to lower rates.
Leading Economic Indicators
Thursday, June 17,10:00 am, et
Up 0.4%
Important. An indication of future economic activity. A smaller increase may lead to lower rates.
Philadelphia Fed Survey
Thursday, June 17,10:00 am, et
17.0
Moderately important. A survey of business conditions in the Northeast. Weakness may lead to lower rates.

Market Forecast:
This week is fairly busy with five economic reports scheduled to be released. The producer and consumer price index data will be the most important releases this week, so two of the five are considered to be of high importance to the markets and mortgage rates. The remaining three are of interest to the markets but likely will not cause a large change in mortgage rates unless they vary greatly from forecasts. None of the relevant data is being posted tomorrow or Tuesday, so look for the stock markets to influence bond trading and mortgage rates again. Expect global economies to continue to factor into trading.
Overall, look for Wednesday to be the biggest day of the week, because it brings us the PPI that is considered to be a key inflation reading. Thursday is also very important with the CPI being posted, so look for the most movement in rates during the middle part of the week. If inflation remains tame mortgage interest rates may improve.

Some Humor:
A man staggered into a hospital with a concussion, multiple bruises, two black eyes, and a five iron wrapped tightly around his throat.
Naturally the doctor asked him, "What happened to you?"
"Well, I was having a quiet round of golf with my wife, when, at a difficult hole, we both sliced our balls into a cow pasture. We went to look for them and while I was looking around I noticed one of the cows had something white at its rear end. I walked over, lifted its tail, and sure enough, there was a golf ball with my wife's monogram on it - stuck right in the middle of the cow's rump."
“Ah,” said the doctor, “then what?”
“Still holding the cow's tail up, I yelled to my wife, 'Hey, this looks like yours!'"
"I don't remember much after that ..."

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