MARKET COMMENT

Mortgage bond prices finished the week lower which put upward pressure on rates.  Rates were neutral the first portion of the week but selling pressure emerged Wednesday afternoon and Thursday morning.  Stocks were very volatile as trade tensions increased between the US and China.  The DOW went from being down 589 points to only closing a few points lower Wednesday.  Chicago Fed President Evans indicated he wants another 25-basis point cut this year.  Consumer credit came in at $14.6B versus the expected $16.5B.  The 10Y Treasury auction was weaker than average.  The producer price index rose 0.2% and the core value, which excludes the volatile food and energy costs, fell 0.1%.

Mortgage interest rates finished the week worse by approximately 1/4 of a discount point.

LOOKING AHEAD

Economic Indicator Release Date & Time Consensus Estimate Analysis
Consumer Price Index Tuesday, Aug. 13,
8:30 am, et
Up 0.2%,
Core up 0.1%
Important.  A measure of inflation at the consumer level. Weaker figures may lead to lower rates.
Weekly Jobless Claims Thursday, Aug. 15,
8:30 am, et
208K Important.  An indication of employment.   Higher claims may result in lower rates.
Retail Sales Thursday, Aug. 15,
8:30 am, et
Up 0.8% Important.  A measure of consumer demand.  A smaller than expected increase may lead to lower mortgage rates.
Preliminary Q2 Productivity Thursday, Aug. 15,
8:30 am, et
Up 0.1% Important.  A measure of output per hour.  Improvement may lead to lower mortgage rates.
Industrial Production Thursday, Aug. 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 Thursday, Aug. 15,
9:15 am, et
77.8% Important.  A figure above 85% is viewed as inflationary. Weaker figure may lead to lower rates.
Philadelphia Fed Survey Thursday, Aug. 15,
10:00 am, et
17.8 Moderately important.  A survey of business conditions in the Northeast.  Weakness may lead to lower rates.
Housing Starts Friday, Aug. 16,
8:30 am, et
1255K Important.  A measure of housing sector strength.  Weakness may lead to lower rates.
U of Michigan Consumer Sentiment Friday, Aug. 16,
10:00 am, et
98.3 Important.  An indication of consumers’ willingness to spend.  Weakness may lead to lower mortgage rates.

 

Productivity

Productivity is the rate at which goods or services are produced.  It is most commonly defined in terms of labor, which is the contribution of people to the process.  Labor costs represent about two thirds of the value of the output produced.  The Bureau of Labor Statistics of the US Department of Labor releases the most widely cited productivity statistics quarterly and annually. Increased productivity is often credited for economic growth with little signs of inflation.  Productivity is significant in that as it increases, businesses can produce more with the same or less input.  This wealth building effect is vital to the US economy.  As productivity increases, the US economy generally performs better.  As productivity decreases, the economy generally suffers.

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